GIFT City commodity trading proposal under govt review: IFSCA chief

IFSCA is discussing with the government a proposal to classify commodity trading as a financial product in GIFT IFSC, potentially boosting India's role in global commodity markets

The International Financial Services Centres Authority (IFSCA), the unified regulator in Gift City, is in discussions with the government to allow commodity trading to be classified as financial product in the financial hub, the chairperson K Rajaraman said on Wednesday.

 

“The proposals to permit commodity trading as a financial service in GIFT-IFSC, basically, commodity trading contracts as financial products, is under examination by the government of India. We hope to hear soon from the government,” said Rajaraman at the MCX Global Commodity Conclave.

 

The proposals, drawn from an earlier report submitted by an expert committee, are aimed at positioning the Gujarat-based financial hub as a global centre for commodity trading.

 

 

“India must move from being a price taker to a price setter. We need an onshore financial nerve centre that seamlessly processes hedges and finances and prices to power our economy,” the chairperson added.

 

He added that the presence of international financial centres in Gift-IFSC and their strong balance sheet, provides liquidity mechanisms which the international commodity market demands. Industry players share that the presence of treasuries by multi-national conglomerates in Gift-IFSC could also help boost the participation in commodity trading.

 

“If you look at the trade finance piece, the global trade finance gap is a very important challenge which affects especially the smaller amongst the commodity traders. So, GIFT-IFSC can help address this by bringing together banks, trade finance platforms, insurers, funds, fintech companies and technology providers,” he said.

 

The chairperson detailed that a few funds in the financial hub has started doing precious metal trades and it is expected that in some time they may look at the commodity markets also.