Sebi Plans to Strengthen Commodity Markets and Institutional Participation

The Securities and Exchange Board of India (Sebi) is taking steps to enhance institutional participation in both agricultural and non-agricultural commodity markets. The move aims to make these markets more attractive for hedging and boost overall market depth.

Sebi Chairman Tuhin Kanta Pandey, speaking at the Bloomberg Forum for Investment Management, emphasized the importance of strengthening India’s agri and non-agri commodity markets. “We are looking to enhance institutional participation to make this market more attractive for hedging,” he said, highlighting Sebi’s strategic focus on broadening market participation.

Focus on Cash Equities and Derivatives

Pandey also pointed out that deepening the cash equities market and improving the derivatives segment remain a high priority for Sebi. The regulator intends to be thoughtful and consultative in proposing measures that enhance market efficiency and attract a diverse set of investors.

Last month, Pandey had outlined plans for Sebi to engage with the government to allow banks, insurance companies, and pension funds to participate in non-agricultural commodity derivative markets. In addition, Sebi is reviewing proposals to allow foreign portfolio investors (FPIs) to trade in non-cash settled, non-agricultural commodity derivative contracts.

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Corporate Bonds and Municipal Market Development

Beyond commodities, Sebi is also focusing on deepening the corporate bond market. Steps have been taken to make the market more accessible for both issuers and investors, with bond derivatives under consideration as an additional measure to strengthen this segment.

Furthermore, the growth of municipal bonds is being actively encouraged through regulatory reforms and outreach programmes, aiming to provide investors with more opportunities while supporting infrastructure funding.

Sebi’s Forward-Looking Approach

Sebi’s initiatives signal a strategic push to broaden market participation, attract institutional players, and improve liquidity across commodity, equity, and bond markets. With these steps, the regulator aims to make India’s financial markets more robust, inclusive, and investor-friendly.

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