Alerts & Updates 29th Sep 2022
In continuation of the decision taken at SEBI board meeting dated June 29, 2022 (available here) to allow Foreign Portfolio Investors (FPIs) to participate in Exchange Traded Commodity Derivatives (ETCDs) market, SEBI has now laid down conditions for participation of FPIs in ETCDs. With this, the existing EFE (Eligible Foreign Entities) route for participating in ETCDs has been discontinued.
Trading in non-agricultural commodity derivative: To begin with, FPIs will be allowed to participate in cash settled non-agricultural commodity derivative contracts and indices comprising such non-agricultural commodities.
FPIs to be subject to risk management measures: FPIs desirous of participating in ETCDs shall be subject to risk management measures applicable from time to time.
Position Limits for participation of FPIs in ETCDs:
– FPIs other than individuals, family offices and corporates may participate in eligible commodity derivatives products as ‘Clients’ and shall be subject to all rules, regulations and instructions, position limit norms as may be applicable to clients, issued by SEBI and stock exchanges, from time to time.
– FPIs belonging to categories viz. individuals, family offices and corporates will be allowed position limit of 20% of the client level position limit in a particular commodity derivative contract.
The aforesaid changes have been made vide SEBI Circular dated September 29, 2022 (available here).
We trust you will find this an interesting read. For any queries or comments on this update, please feel free to contact us at insights@elp-in.com or write to our authors:
Manendra Singh, Associate Partner –ManendraSingh@elp-in.com;
Tanvi Goyal, Principal Associate –TanviGoyal@elp-in.com
As per the rules of the Bar Council of India, lawyers and law firms are not permitted to solicit work or advertise. By clicking on the "I Agree" button, you acknowledge and confirm that you are seeking information relating to Economic Laws Practice (ELP) of your own accord and there has been no advertisement, personal communication, solicitation, invitation or any other inducement of any sort whatsoever by or on behalf of ELP or any of its members to solicit any work through this website.
