SEBI Reviews Commodity Contract Limits to Boost Market Depth

Market regulator SEBI is reviewing trade caps on non-agricultural contracts to boost trading volume and depth while keeping risk controls strong, according to Chairman Tuhin Kanta Pandey. Speaking on Saturday in New Delhi at an event held by the Commodity and Capital Market Participants Association of India, Mr. Pandey noted that market design should help contracts grow, adding that SEBI has finished talks on the issue and new rules will come out soon. ## Commodity Reforms For farm goods, mandatory physical delivery right from the start can block market growth, so a phased rollout could let contracts mature first. SEBI is also trying to lower structural hurdles in commodity markets by talking with stakeholders about GST problems faced by users who trade goods on exchange platforms. Mr. Pandey stated that technology must fit the real needs of farmers, producers, commercial users, and processors, improving access while keeping fair access and market safety intact. ## Investor Outreach To help more people understand these markets, SEBI will boost efforts through Project Jagrook to spread awareness among farmers, farmer producer organisations, MSMEs, and hedgers. Mr. Pandey pointed out that open access without clear understanding is not true inclusion, and users must know both the uses and risks of commodity derivatives. Last month, the board cleared a plan to let foreign portfolio investors join physically settled, non-agricultural commodity derivative contracts under strict safeguards. ## Context Market regulators constantly review trading rules to balance the need for high liquidity with strong investor protection and fraud prevention. Such policy adjustments often involve public consultations with industry stakeholders before final guidelines are issued to the public.