India is considering significant reforms to its commodity derivatives markets as a newly appointed advisory panel under the Securities and Exchange Board of India (SEBI) prepares to submit recommendations aimed at improving market efficiency and participation. The panel, led by Tuhin Kanta Pandey, is reviewing long-standing restrictions introduced in 2021, including trading bans on seven major agricultural commodities such as paddy and wheat.

Preliminary assessments suggest that the bans have had limited impact on controlling spot market prices, prompting regulators to reconsider their effectiveness. As a result, the panel is expected to recommend lifting or easing these restrictions to restore liquidity and improve price discovery in agricultural derivatives. The proposed changes could help farmers, traders, and processors better manage price risk while strengthening the link between physical and futures markets.

In addition to lifting commodity-specific bans, the advisory group is also exploring simplified tax rules and lower entry barriers for participants across both agricultural and metals derivatives markets. If implemented, these reforms could stimulate trading activity, attract a broader range of market participants, and enhance the overall resilience and transparency of India’s commodity markets, positioning the country for more efficient risk management amid global supply and price volatility.

Link: https://www.finimize.com/news/india-considers-easing-rules-on-commodity-derivatives-trad