FPIs Allowed To Trade In Commodity Derivatives On IFSC Bourses
FPIs’ participation limited to trading in derivatives contracts in non-agricultural commodities.
Foreign portfolio investors can participate in commodity derivatives trading on stock bourses located in the International Financial Services Centre (IFSC), SEBI said on Tuesday.
The permission for FPIs is subject to certain conditions, including that their participation would be “limited to the derivatives contracts in non-agricultural commodities only”.
According to a circular, FPIs would be permitted to participate in commodity derivatives contracts traded in stock exchanges in IFSC. The decision has been taken following representations received from the exchanges operating in IFSC as well as after consultations with the government and RBI, it added.
Apart from being limited to trading in derivatives contracts in non-agricultural commodities, SEBI said contracts would be “cash settled on the settlement price determined on overseas exchanges”. All transactions shall be denominated only in foreign currency only, the regulator added.
In March 2016, the watchdog had allowed trading in commodity derivatives at stock exchanges operating in the IFSC. It has since been working on ways to bolster commodity derivatives trading activity as well as attract more foreign portfolio investments.
Gujarat International Finance Tec-City (GIFT City) is the first IFSC in the country.