MUMBAI: The Securities and Exchange Board of India (Sebi) will soon set up a working group to review the non-agricultural commodity derivatives market, Sebi chairman Tuhin Kanta Pandey said on Saturday.
Pandey said expert groups constituted by the regulator, focused on agricultural commodities, are examining whether the regulatory framework governing margins, position limits, and delivery and settlement mechanisms can be optimized without compromising market integrity. “Their recommendations will assist us in taking necessary developmental measures after due consultation with all stakeholders.”
The move comes at a time when India’s commodity derivatives market is witnessing rapid expansion. Pandey noted that commodity markets have been under Sebi’s oversight since 2015 and now span 104 notified commodities and variants, with 34 unique commodities actively available for trading.
Annual notional turnover in FY25 stood at ₹580 trillion, nearly double that of the previous year, and has already crossed ₹628 trillion as of 31 October 2025, underscoring the growing role of these markets in price discovery and risk management.
The market regulator has already set up an expert group to deepen the agricultural commodities derivatives segment and improve participation.
In addition to the working groups, Sebi is in discussions with the Reserve Bank of India and the Insurance Regulatory and Development Authority of India to enable banks and insurance companies to participate in commodity derivatives.
“Enhanced institutional participation will bring in higher liquidity, making the market more attractive for hedging,” Pandey said.
The regulator is also engaging with the central government to resolve goods and services tax (GST)-related issues faced by participants who wish to take or give delivery of commodities through exchange platforms. Addressing these issues is critical to strengthening the link between derivatives markets and physical trade, the Sebi chief said.
On the compliance front, Sebi has implemented the Samuhik Prativedan Manch, a common reporting portal aimed at easing reporting requirements for stockbrokers. A facility to extend the portal to commodity-only brokers is currently under development. Pandey said the initiative is part of a broader effort to improve ease of doing business and compliance across market segments.
Sebi is also examining a proposal to rationalize investor protection mechanisms at exchanges. At present, separate investor protection funds exist for equity and equity-related products and for commodities. The regulator is considering whether a single investor protection fund for all products offered by an exchange could be more efficient, while continuing to safeguard investor interests.
Pandey said robust commodity derivatives markets play a critical role in price discovery and risk management, especially amid volatile global conditions driven by geopolitical tensions, policy uncertainty and climate-related shocks. The objective, he said, is to build markets defined not just by trading volumes, but by the value they create for the broader economy.
