The Securities and Exchange Board of India (SEBI) is set to initiate discussions with the government regarding a proposal to permit banks, insurance companies, and pension funds to invest in the country’s non-agricultural commodity derivative markets. This significant announcement was made by SEBI Chairman Tuhin Kanta Pandey on Wednesday, September 17, 2025.
In a further push to expand market participation, the capital markets regulator is also actively evaluating a plan to allow foreign portfolio investors (FPIs) to engage in non-cash settled, non-agricultural commodity derivative contracts. These measures were highlighted by Mr. Pandey during an event hosted by MCX, emphasizing SEBI’s commitment to market growth.
Looking ahead, SEBI plans to integrate commodity-specific brokers into a unified reporting mechanism for compliance by the end of December.
Mr. Pandey underscored the pivotal role of commodity derivative markets in the national economy, stating India’s ambition to evolve into a ‘price-setter’ rather than remaining a ‘price taker’ on the international stage. He stressed the importance of enhancing the global and domestic acceptance of Indian benchmarks, especially during volatile periods, where exchanges can provide crucial price insurance and help safeguard profit margins for businesses.
Highlighting recent global economic shifts, Mr. Pandey noted that the United States’ decision to double tariffs on aluminium and copper imports has a direct impact on India’s export sector. In such a dynamic and unpredictable environment, a robust derivatives market offers a vital mechanism for Indian producers and consumers to hedge against sudden global price fluctuations.
The SEBI chief also pointed out the critical importance of these markets for essential minerals like lithium, cobalt, nickel, and rare earth elements, which are fundamental to green energy technologies and present unique challenges. He posed a crucial question: “What role can our markets play in India’s pursuit of self-reliance in critical minerals? Can we innovate financial instruments that effectively support and de-risk the exploration and mining of these vital resources?”
Reaffirming SEBI’s dedication to maintaining the integrity and safety of commodity markets, Mr. Pandey reiterated that real-time margin collection and continuous monitoring are fundamental and non-negotiable regulatory principles. He concluded by asserting that strengthening India’s commodity markets is a top priority on SEBI’s regulatory agenda, outlining ongoing and future initiatives. This includes the formation of a committee to deepen the agricultural commodity segment and a forthcoming working group focused on developing the non-agricultural commodity sector, encompassing metals.