Shares of Multi Commodity Exchange of India (MCX) are likely to remain in focus after SEBI Chairman Tuhin Kanta Pandey indicated that the regulator is open to allowing foreign portfolio investors (FPIs) to participate in options trading in commodity derivatives.
In an interview to the media, Pandey said commodity derivatives have not been looked at in a sufficiently proactive manner in recent years and that SEBI is working towards strengthening and deepening the segment.
“Commodity derivatives have not been looked at in a proactive manner,” he said, adding that the regulator will soon move towards allowing FPIs in options trading in commodity derivatives.
He clarified that the framework for such participation will be based on detailed work carried out by a working group. The group’s recommendations will be placed before the Commodity Derivatives Advisory Committee before any regulatory changes are finalised.
“The way in which we allow will be based on deep work done by the working group,” Pandey said, indicating that the approach will be calibrated and supported by appropriate safeguards.
He further stated that a consultation paper on permitting FPIs in commodity options will follow, signalling that stakeholder feedback will be sought before implementation.
The development is seen as structurally positive for MCX, India’s leading commodity derivatives exchange, as allowing FPIs into commodity options could potentially deepen liquidity, expand participation and enhance price discovery across key segments such as energy, metals and bullion.
At present, FPI participation in commodity derivatives remains limited. Any move to widen access — especially in the options segment — could significantly boost trading volumes and strengthen the growth outlook for the exchange.
Investors will now watch for the release of the consultation paper and the contours of the proposed framework to assess the potential impact on MCX’s volumes and earnings trajectory.