Sebi allows options trading on commodity exchanges

By: | Updated: September 28, 2016 5:30 PM

With an aim to deepen the commodity derivatives markets and enhancing liquidity, markets regulator Sebi today allowed options trading on commodity bourses.

With an aim to deepen the commodity derivatives markets and enhancing liquidity, markets regulator Sebi today allowed options trading on commodity bourses. (Reuters)With an aim to deepen the commodity derivatives markets and enhancing liquidity, markets regulator Sebi today allowed options trading on commodity bourses. (Reuters)

With an aim to deepen the commodity derivatives markets and enhancing liquidity, markets regulator Sebi today allowed options trading on commodity bourses. This has been a long pending demands from the exchanges, investors and market participants. So far, only future trading was permitted on commodity bourses. “It has been decided that commodity derivatives exchanges shall be permitted to introduce trading in ‘options’,” the Securities and Exchange Board of India (Sebi) said in a circular. The move become effective from today.

Sebi said commodity exchanges willing to start trading in options contracts would have to take prior approval of the regulator for which detailed guidelines will be issued in due course.

The introduction of new commodity derivatives product is considered to be conducive for the overall development of the market, attracting broad base participation, enhancing liquidity, facilitating hedging and bringing more depth to the market.

The decision was taken on the basis of recommendation made by Sebi’s Commodity Derivatives Advisory Committee (CDAC).

Earlier this year, Finance Minister Arun Jaitley in his Budget 2016-17 speech, had announced that new derivative products will be developed by Sebi in the commodity derivatives market.

The turnover of commodity exchanges stood at Rs 67 lakh crore in 2015-16, up 9 per cent from the preceding fiscal.

At the end of June, the aggregate turnover in agricultural commodities at all the three national exchanges – MCX, NCDEX and NMCE – stood at Rs 77,696 crore, while that of the non-agricultural commodities was at Rs 5.73 lakh crore.

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