FPIs allowed to trade in commodity derivatives on IFSC bourses

Foreign portfolio investors can participate in commodity derivatives trading on stock bourses located in the International Financial Services Centre (IFSC), Sebi said today.
The permission for FPIs is subject to certain conditions, including that their participation would be "limited to the derivatives contracts in non-agricultural commodities only".
According to a circular, FPIs would be permitted to participate in commodity derivatives contracts traded in stock exchanges in IFSC.
The decision has been taken following representations received from the exchanges operating in IFSC as well as after consultations with the government and RBI, it added.
Apart from being limited to trading in derivatives contracts in non-agricultural commodities, Sebi said contracts would be "cash settled on the settlement price determined on overseas exchanges".

All the transactions shall be denominated in foreign currency only, it added.

In March 2016, the watchdog allowed trading in commodity derivatives at stock exchanges operating in the IFSC.
Sebi has been working on ways to bolster commodity derivatives trading activities as well as attract more foreign portfolio investments to the markets.
Gujarat International Finance Tec-City (GIFT City) is the first IFSC in the country.