SEBI vide its Circular dated 29th September, 2022 decided to allow foreign investors to participate in Indian ETCDs through the FPI route, subject to conditions prescribed by SEBI.
The participation of FPIs in Indian ETCDs would be subject to the following:
- To begin with, FPIs will be allowed to participate in cash settled non-agricultural commodity derivative contracts and indices comprising such non-agricultural commodities.
- FPIs desirous of participating in ETCDs shall be subject to risk management measures applicable, from time to time.
Position Limits:
- FPIs other than individuals, family offices and corporates may participate in eligible commodity derivatives products as ‘Clients’ and shall be subject to all rules, regulations and instructions, position limit norms as may be applicable to clients, issued by SEBI and stock exchanges, from time to time.
- FPIs belonging to categories viz. individuals, family offices and corporates will be allowed position limit of 20 per cent of the client level position limit in a particular commodity derivative contract.
- The participation of FPIs including individuals, family offices and corporates shall be subject to compliance with the provisions of SEBI (Foreign Portfolio Investors) Regulations, 2019, SEBI (Custodian) Regulations, 1996 and other applicable SEBI circulars on ETCDs.
- Stock Exchanges/Clearing Corporations may specify additional safeguards/conditions, as deemed fit, to manage risk and ensure orderly trading in ETCDs.
- The provisions of this circular shall come into immediate effect and is applicable to all Recognized Stock Exchanges having Commodity Derivatives Segment, Foreign Portfolio Investors registered with SEBI and Custodians registered with SEBI.
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