CDAC gives nod for foreign entities to invest in commodity derivatives

The Securities and Exchange Board of India (SEBI)-appointed Commodity Derivative Advisory Committee (CDAC) held a meeting on November 15, where two important points were discussed. One, the recent bans on a couple of agricultural commodities and the impact of that on the market's credibility and institutional participation. The second, and a more important one, was on a proposal to allow eligible foreign entities to invest in the commodity derivatives market. CDAC aims at development of the commodities market and to deepen the commodities market sphere.

“In 2016, in the CDAC meeting, we all decided that there should be participation by institutional players so that our markets deepen and there is more participation by all kinds of participants,” Narinder Wadhwa, president of Commodity Participants Association of India (CPAI), said in an interview to CNBC-TV18.

On FPIs, he said, “There was a discussion between the stakeholders that more institutional participants like FPIs, banks, pension funds, and insurance companies should also be allowed to participate in the market. So, the discussion was around allowing more institutional players into the market and in this FPIs are the major participants.”

“As a participant, we put out our view that we are in favour of having FPIs in the market, definitely with certain restrictions, and most of the members were of the same view. I hope that this approval in the CDAC will go through and it will be put up at the next board meeting of SEBI,” said Wadhwa.

For the entire interview, watch the video