India’s securities regulator has widened foreign investor access to the country’s commodity derivatives market, allowing participation in physically settled non-agricultural contracts under a structure designed to prevent overseas investors from taking physical delivery.
The Securities and Exchange Board of India approved the changes Thursday as part of a broader package intended to deepen markets and increase participation by global investors.
Foreign portfolio investors previously faced restrictions on participating in physically settled contracts linked to commodities including crude oil, natural gas, gold and silver because of operational constraints associated with delivery.
Under the new framework, foreign portfolio investors can close or roll over positions before expiry, with mechanisms designed to prevent them from entering the physical-delivery process.
The regulator expects the change to broaden participation, particularly in bullion markets, and bring India’s commodity derivatives framework closer to other major markets.
SEBI also expanded the activities available to India-based portfolio managers, allowing registered managers to manage or advise overseas funds investing in foreign securities.
Together, the measures reflect a broader attempt to attract international capital and financial-management activity while deepening India’s domestic markets.
Investors will now watch whether expanded eligibility translates into materially higher foreign participation and liquidity across energy and precious-metals derivatives.
