Commodity hedge funds see low position limits, tax as hurdles

Last week, Sebi allowed few Category III AIFs or hedge funds, to invest in commodity derivates

Hedge funds in commodity derivatives may begin business cautiously, exactly the way the regulator intended it.
 
A few category-3 alternative investment funds(AIFs) were last week allowed by the Securities and Exchange Board of India(SE to invest in commodity derivatives. Most of them will approach existing investors for permission to invest in commodity derivatives. The reason for the AIFs’ caution is they have been treated as clients and client-level position limits will apply to them. Thus, they cannot take more than a 10 per cent position in any commodity.
 
A source said there were a handful of commodities like