SEBI To Seek Govt Nod for Banks, Insurers, Pension Funds in Commodity Derivatives Market: Pandey

Moneylife Digital Team 17 September 2025

Investor Interest

Securities and Exchange Board of India (SEBI) will engage with the Union government to consider allowing banks, insurance companies and pension funds to participate in the non-agricultural commodity derivatives market, as part of efforts to broaden and deepen India’s commodity trading ecosystem, says Tuhin Kanta Pandey, chairman of SEBI.

Speaking at a Multi Commodity Exchange (MCX) event on 'Metals – From Mines to Markets', Mr Pandey said SEBI is examining a proposal to permit foreign portfolio investors (FPIs) to trade in non-cash settled, non-agricultural commodity derivative contracts. “We will also engage with the government to consider banks, insurance companies and pension funds to trade in these markets,” he says.

The SEBI chief stressed that a deeper commodity derivatives market was essential for India’s economic resilience and global positioning. He underlined that metals, critical to infrastructure, energy and transport, were not just industrial inputs but financial instruments that enabled price discovery and risk management.

Mr Pandey pointed out that the merger of the Forward Markets Commission (FMC) with SEBI in 2015 had provided a unified regulatory framework, enabling the sector’s growth. Key steps such as delivery-based contracts and late-evening trading sessions had helped align domestic benchmarks with global markets.

“Strengthening India’s commodity markets is high on SEBI’s agenda. Our approach will be multi-pronged – integrity and safety of markets, innovation, deeper participation, and awareness,” Mr Pandey says.

He noted that measures were underway to ease compliance requirements, including bringing commodity-specific brokers under the Samuhik Prativedan Manch by December 2025.

Highlighting the global context of volatility and supply-chain disruptions, the SEBI chief says robust derivatives markets provide a shield against price shocks, especially for critical minerals like lithium, cobalt and nickel which are vital to India’s green energy transition. He urged stakeholders to collaborate in building benchmarks and financial instruments that support exploration and mining of these strategic resources.

He also emphasised the need to broaden domestic benchmarks and increase awareness among small and medium enterprises (SMEs) about hedging tools available on exchanges. “Our markets must move from being price-takers to price-setters, aligned with national priorities like Make in India and the Critical Minerals Mission,” he says.

The roadmap laid out by SEBI chief places institutional participation at the centre of commodity market reforms, while also focusing on regulatory integrity, innovation and investor education.

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