Govt brings commodity option trading, settlement at par with equities

Commodity options can now be settled directly instead of the current practice of options devolving into futures first and then being settled

The government has brought commodity options trading and settlement on a par with equities, paving the way for new norms for farmers and small and medium enterprises to step up hedging.

Commodity options can now be settled directly. The current practice is options devolve into futures first and then futures are settled.

This was not attracting enough hedging because of the complexities involved. 

Now, brokers are hoping than once the Securities and Exchange Board of India (Sebi) implements the new norms, even hedging by farmers and small and medium units will increase.

Through a gazette notification making changes in Securities and Contract Regulations Act,