SEBI Unveils Strategic Reforms to Elevate Commodity Derivatives Market

The Securities and Exchange Board of India (SEBI) is introducing measures to boost commodity derivatives market participation and liquidity. Chairman Tuhin Kanta Pandey emphasized efforts to invite foreign investors, streamline registration, and propose unified tax models to enhance market transparency and mitigate trading risks.

The Securities and Exchange Board of India (SEBI) has announced new strategies aimed at increasing participation and liquidity in the commodity derivatives market. Chairman Tuhin Kanta Pandey revealed these plans during the Global Commodity Conclave 2026 in Mumbai, highlighting the invitation of Foreign Portfolio Investors (FPIs) and mutual funds as a means to deepen market understanding and attract hedgers.

Discussion also turned to new pricing mechanisms such as the Volume-Weighted Average Price (VWAP) to mitigate risks like price manipulation and tracking errors. 'Mutual funds now require a reliable benchmark price,' noted Pandey, addressing the transition necessity following issues with previous systems that allowed trade manipulations.

Furthermore, SEBI is advocating for a unified IGST model in collaboration with the GST Council to facilitate smoother commodity deliveries. Pandey stressed the importance of minimizing logistical frictions and procedural complexities to bolster the ease of doing business and enhance market functioning.