ZeeBiz Exclusive: SEBI may allow FPIs’ entry into commodity market in its June 29 board meeting

The Securities and Exchange Board of India (SEBI) is likely to allow Foreign Portfolio Investors (FPIs) entry into the commodity market, Zee Business Special Correspondent Tarun Sharma said in the report on Tuesday. The SEBI board will meet on June 29, to take a slew of decisions/approvals. 

Terming this as the biggest decision to be made by SEBI, Sharma said, FPIs may first be allowed in non-Agri commodity segments such as gold, and metal among others. He added that the decision to allow FPIs in the Agri segment shall be decided later.  

The Agri segment is directly linked to the food prices and fear of price rising emerges if FPI is allowed in it, Sharma noted. However, they shall be allowed in the Agri category too, going forward he mentioned. 

The entry of FPIs in the commodity market has been long due, as SEBI earlier in December 2021 had come up with a discussion paper on the same, and the same was also approved by CDAC (commodity derivative advisory committee), the special correspondent said. 

29 जून को SEBI की बोर्ड मीटिंग..

मीटिंग में क्या बड़े फैसले होंगे

FPIs को कमोडिटी में एंट्री पर चर्चा संभव..

जानिए Exclusive खबर तरूण शर्मा से...@talktotarun @AnilSinghvi_ pic.twitter.com/oVeMqTjA0D

— Zee Business (@ZeeBusiness) June 21, 2022

He added, that the market regulator had also sought the Reserve Bank of India’s recommendation post releasing the discussion paper on the same, to which the central bank had also given its approval. 

Besides, this decision would also aid the Indian corporates mostly FMCG and oil companies to enter the commodity market, as they would also come for hedging, amid huge hedges.  

Another decision that SEBI is likely to take is relaxing minimum stake sale norms to 2.5 from 5 per cent for the companies with more than Rs 1 lakh crore market capitalization as the same was also done for the Life Insurance Corporation during its public offer in the previous month. 

Moreover, the capital markets regulator’s board shall approve the proposed regulatory framework for algorithmic trading (algo trading) by retail investors to make such trading safe and prevent market manipulations. 

The algo trading system automatically monitors the live stock prices and initiates an order when the given criteria are met. This frees the trader from having to monitor live stock prices and initiate manual order placement.