SEBI proposes wider FPI commodity derivatives access

On August 11, 2026, the India — Securities and Exchange Board of India (SEBI) issued a consultation paper proposing to widen foreign portfolio investor (FPI) participation in India's exchange-traded commodity derivatives market. The proposals would allow FPIs to trade non-agricultural index derivatives regardless of whether the underlying contracts are cash-settled, and to participate in physically settled non-agricultural commodity derivatives, including contracts linked to crude oil, natural gas, gold, silver, and base metals. Currently, FPIs are restricted to cash-settled non-agricultural derivatives. To prevent FPIs from taking physical delivery, SEBI proposed a two-tier safeguard: FPIs must voluntarily square off or roll over positions before the tender period (T-3), and if they fail, positions would be automatically transferred to a designated trading or clearing member. FPIs would need to enter tripartite or bipartite agreements and may be subject to a pre-agreed 'Proprietary Risk Absorption Charge'. SEBI invited public comments until September 1, 2026. The proposals aim to broaden the participant base, enhance liquidity and price discovery, and integrate India's commodity derivatives market with international markets. The Commodity Derivatives Advisory Committee has backed the proposals.