Sebi sets eyes on commodity index derivatives, works on guidelines

Commodity contracts, instead of commodities, which are the underlying, will be components of the index. Second, it will be a future price index and not a spot price index

Securities and Exchange Board of India Chairman Ajay Tyagi has said in an annual report “there are plans to consider more commodity options contracts to be launched, besides working on guidelines for index products”. Sebi will have to first finalise guidelines, which, according to sources, will suggest common standards for preparing commodity indices and later there will be regulations regarding trading.

Hence it will be a long wait before trading in index-based derivatives’ much-awaited indices starts.

Experts say preparing indices for commodities is most complex, unlike equities. In equities most of the volumes come from index derivatives and index options. Sources said