FPI Update: SEBI vide Circular dated 29th September 2022 has permitted participation of Foreign Portfolio Investors in Exchange Traded Commodity Derivatives in India.
The Circular gives immediate effect to the decisions taken during the SEBI’s board meeting held on 29th June 2022.
The salient features for participation of FPIs in ETCDs are as under:
1] The existing Eligible Foreign Entity route, which required actual exposure to Indian physical commodities, has been discontinued.
2] Any foreign investor desirous of participating in Indian ETCDs with or without actual exposure to Indian physical commodities, can do so through FPI route.
3] FPIs will be allowed to trade in all non-agricultural commodity derivatives and select non-agricultural benchmark indices.
4] To begin with, FPIs will be allowed only in cash-settled contracts. Risk management measures would be applicable.
5] Position limits for FPIs (other than individuals, family offices and corporate bodies) will be at par with those presently applicable for Mutual Fund schemes i.e. as a client
6] FPIs belonging to categories viz. individuals, family offices and corporates will be allowed 20% of the client level position limit in a particular commodity derivatives contract, similar to the position limits prescribed for currency derivatives