Source: TH
Context:
SEBI Chairman Tuhin Kanta Pandey announced that the regulator will form a working group to review India’s non-agricultural commodity derivatives segment. The group will be notified soon.
Objective:
- Review structure, rules, and performance of non-agri commodity derivatives.
- Strengthen the market framework and address sector-specific challenges.
What are Non-Agri Commodity Derivatives?
Non-Agricultural (Non-Agri) Commodity Derivatives are financial contracts whose value is derived from non-farm commodities such as metals and energy products. These contracts are traded on commodity exchanges for price discovery and risk management (hedging).
Major Categories of Non-Agri Commodities
- Metals
- Precious metals: Gold, Silver
- Base metals: Copper, Aluminium, Zinc, Nickel, Lead
- Energy Commodities
- Crude oil
- Natural gas
Types of Derivative Instruments
- Futures Contracts: Obligation to buy/sell a commodity at a future date at a predetermined price
- Options Contracts: Right (not obligation) to buy/sell at a specified price
- (Swaps exist globally but are limited in Indian exchange-traded markets)
Where are They Traded in India?
- Multi Commodity Exchange of India (MCX) – primary exchange for non-agri commodities
- National Commodity and Derivatives Exchange (NCDEX) – mainly agri, limited non-agri products
Regulator
- Regulated by the Securities and Exchange Board of India (SEBI)
- Commodity derivatives market brought under SEBI in 2015
