SEBI Wants To Increase Investor Participation In Commodities And Bond Markets

The Securities and Exchange Board of India (SEBI) aims to increase institutional participation in agricultural and non-agricultural commodity markets, making them more attractive for hedging.

Chairman Tuhin Kanta Pandey, speaking at the Bloomberg Forum for Investment Management, emphasized that strengthening India’s commodity markets remains a key focus area for SEBI, adding that deepening the cash equities and derivatives markets is also a high priority.

Pandey said that the regulator will take a consultative approach when introducing further policy measures to improve market depth and efficiency.

Increased Foreign Investors Participation?

Last month, Pandey said SEBI will engage with the government to allow banks, insurance companies, and pension funds to participate in non-agricultural commodity derivatives. The regulator is also exploring a proposal to permit foreign portfolio investors (FPIs) to trade in non-cash-settled, non-agri commodity derivative contracts, a move expected to increase global participation and liquidity.

Last month, Reuters reported that the markets regulator and the Reserve Bank of India (RBI) are working on measures to make it easier for overseas investors to enter domestic markets amid continued capital outflows by foreign institutional investors (FIIs).

Discussions were underway to streamline documentation and reduce scrutiny for investors already regulated in other jurisdictions.

Currently, registering as a foreign portfolio investor (FPI) in India can take as long as six months.
The proposed reforms aim to shorten this process to just 30 - 60 days, bringing India’s framework closer to global benchmarks.

Beyond commodities, SEBI is actively working to deepen the corporate bond market, making it more accessible to both issuers and investors. Pandey revealed that the regulator is examining bond derivatives as a potential tool to strengthen the fixed-income ecosystem.

SEBI is encouraging the growth of municipal bonds through ongoing regulatory reforms and outreach programs, aimed at helping local bodies raise funds more efficiently and attract broader investor participation in India’s growing debt market.

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