MCX Shares Gain 1.5% as SEBI Proposes FPI Access to Physical-Settled Commodity Derivatives

MCX shares rose around 1.5% after SEBI proposed allowing Foreign Portfolio Investors (FPIs) to participate in physically settled non-agricultural commodity derivative contracts traded on domestic exchanges. The proposal aims to increase institutional participation, improve market liquidity and strengthen price discovery in India’s commodity derivatives market. Under the proposed framework, FPIs would also be allowed to participate in non-agricultural commodity index derivatives. However, they would be required to exit or roll over their open positions before the start of the tender or staggered delivery period, ensuring that they do not take actual delivery of commodities. SEBI has proposed a two-tier safeguard mechanism, under which FPIs would be encouraged to square off or roll over positions from T-3 until the end of market hours on T-1. The regulator also proposed standardised onboarding agreements for FPIs across commodity exchanges. If approved, the changes could boost institutional participation, liquidity and efficiency in India’s commodity derivatives market.