MCX shares rally 5 percent as Sebi chair Tuhin Kanta talks of steps to revive commodity derivatives

The government has been trying to link farmers with marketplace, and many initiatives have been taken in this regard, yet, derivative trading volumes at agri-commodity exchanges have been falling in recent years.

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26 Aug, 2025 12:21

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Shares of leading commodity derivatives exchange MCX are sharply higher by 5 percent tracking comments by market regulator Sebi's chairman Tuhin Kanta Pandey, who during the MCX Metals Summit 2025 said there are plans to set up a working group on agri and non-agri commodities to address the bottlenecks for the segment's volume growth.

Sebi is of the view that enhanced institutional participation into the commodities market can bring in liquidity and make it more attractive as a tool for hedging, and regulations will be developed to ensure 'prudent institutional access', said the chairman. A proposal to allow FPIs to trade in non-cash, non-agricultural commodity derivative segment is also under examination. The chairman said the regulator will engage with the government to consider banks, insurers and pension funds to trade in these markets.

This is in line with Sebi's plans to revive derivatives trading in agri-commodities, and the development was previously reported by Moneycontrol in July 2025.

"Strengthening India's commodity market is high on Sebi's regulatory and development agenda. We have already constituted a committee to recommend measures for deepening the agri-commodities segment. We will also constitute a working group for developing the non-agri commodities segment, including metals," said Tuhin Kanta Pandey.

Citing ongoing supply chain disruption and tariff wars, Sebi chairman said a robust derivatives market provides a "powerful shield allowing Indian producers and consumers to hedge against global price shocks." This need is even more pronounced in the context of critical minerals, he added.

"Our approach will be multi-pronged. First, we will continue to strengthen the integrity and safety of the market. Measures like real-time margin collection and continued monitoring are non-negotiable. Second, we will foster market development and innovation. This means encouraging our exchanges to constantly evolve. Third, we aim to deepen and widen participation. Our markets are for large corporations, traders, importers and SMEs. They are also available for institutional investors such as mutual funds and AIFs who are increasingly recognising metals as an asset class that improves risk-adjusted returns for investors," Sebi chairman said.