A SEBI-appointed panel is set to recommend easing commodity derivatives regulations—including lifting the ban on futures trading in key agri commodities.
The panel will also propose GST clarity for commodity derivatives and allow institutional traders to collocate on exchange premises.
The agri-commodity ban, in place since 2021 to curb inflation, has faced resistance, and SEBI’s management is reportedly supportive of allowing derivatives trading to resume.
SEBI Panel To Recommend Easing Regulations for Commodity Derivatives: Report
Lifting bans, GST clarity, and collocation access could reshape India’s commodity derivatives ecosystem
Summary
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A panel set up by the Securities and Exchange Board of India (SEBI) will recommend easing regulations on commodity derivatives and suggest policies to attract institutional investors, according to media reports citing sources with direct knowledge of the matter. The panel was formed under SEBI Chairman Tuhin Kanta Pandey earlier this year.
SEBI Regulation Changes Under Pandey
Pandey took charge as chairman in March 2025 and has liberalised rules for equity markets. He is now expected to introduce reforms for the commodity derivatives segment. “Strengthening India’s commodity markets is high on SEBI’s regulatory agenda and it aims to deepen and widen participation,” Pandey had said earlier.
The panel is expected to recommend lifting the ban on derivatives trading in several agricultural commodities, including paddy, wheat, and crude palm oil, Reuters reported. Derivatives trading in these commodities has been banned since 2021 due to concerns over speculative activity distorting spot market prices. According to the report, panel members believe derivatives trading has little impact on agricultural prices and may therefore be resumed. SEBI’s management is also in favour of the proposal, the report said.
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The panel is further expected to recommend changes to tax laws to define the GST rate applicable to commodity derivatives. “Once the panel submits its report, SEBI will request the government for the necessary changes,” the report added.
To strengthen institutional participation, the panel is also expected to propose allowing trading firms to collocate on exchange premises for commodity derivatives. Collocation, currently permitted only for equities, provides faster access to market data and lower latency in trade execution.
Commodity Derivatives Ban
On October 27, 2023, SEBI extended the ban on futures trading in seven agricultural commodities until December 20, 2024. The commodities under the ban include wheat, paddy (non-basmati), chana, mustard seeds, soyabean, crude palm oil, and moong. The extension faced resistance from the National Commodity and Derivatives Exchange (NCDEX) and the Cabinet Secretariat at the time.
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The ban was initially implemented in 2021 to combat rising inflation and was later extended in 2022. As India’s economy is primarily agrarian, the sector remains highly vulnerable to price fluctuations owing to seasonality and the perishable nature of produce.
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