

Cash, with caveats: Is Sebi about to nudge the door open for agri-commodities?
Subscribe to enjoy similar stories.Farm goods that have long remained shut out of cash settlements may be in for a pivotal shift, potentially deepening derivatives trading in India's vital commodities sector. A regulatory panel formed by the Securities and Exchange Board of India (Sebi) has greenlit cash settlements up to fixed thresholds in select agriculture commodities, two people aware of the discussions said, balancing the need to deepen the sector while minimizing the risks.Currently, physical delivery is mandatory for all farm derivatives, meaning traders must hand over or take receipt of the physical goods once the futures or options contract expires.
While this keeps the critical agriculture segment free of excessive speculation and keeps contract prices aligned with real-world prices, it also limits participation and keeps the farm derivatives sector shallow. Meanwhile, metals and energy derivatives have boomed on policy certainty , unlike farm derivatives which have been subject to bans over the years.In December, chairman Tuhin Kanta Pandey said the working group is examining whether the regulatory framework governing margins, position limits, and delivery and settlement mechanisms can be optimized without compromising market integrity.“One of the suggestions is that when you are introducing a contract, can we have such a contract which has a threshold up to which it is cash settled? Once you reach this threshold, you can make it delivery-based.
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