SEBI Chairman, UK Sinha, announced that they are considering allowing institutional investors like mutual funds, banks and FPIs (Foreign Portfolio Investors) to trade in commodities. The announcement was made at the International Commodity Derivatives Conference being held today (17 Feb, 2017) in Mumbai.
Mr. Sinha also said that mutual funds would be the first to receive permission to trade in commodities and that talks with the RBI on letting FPIs trade were still underway. He also said that insurance companies will also be invited to participate in the market soon.
On the topic of allowing banks Mr. Sinha said that SEBI was in talks with the RBI on allowing banks to trade in commodity and wanted to see how confident the RBI was about the financial health of banks before making a decision. He also said since banks were already exposed to commodities through their loans he wanted them to disclose their current exposure first.
This announcement is the latest step SEBI has taken in its drive to get more participants for the commodities markets since its formation in 2015.