How SEBI plans to boost participation in commodity trading
What's the story
The Securities and Exchange Board of India (SEBI) is working with the Goods and Services Tax (GST) Council to address GST-related issues in commodity trading. SEBI Chairman Tuhin Kanta Pandey announced this today, saying that these hurdles affect delivery and settlement on exchange platforms. He emphasized that resolving these issues is crucial for boosting both agricultural and non-agricultural commodities, including gold.
Fund consolidation
SEBI plans single investor protection fund across exchange products
Pandey also revealed that SEBI is considering a proposal for a single Investor Protection Fund (IPF) across all exchange products. Currently, separate IPFs exist for equity and commodity segments. He said, "Our investor survey shows a strong need for targeted awareness in commodity derivatives," adding that SEBI is focusing outreach on farmers, FPOs (Farmer Producer Organizations), exporters, MSMEs (Micro Small and Medium Enterprises), and agri-college students.
Market awareness
Outreach programs and regulated gold products
SEBI's outreach programs with FPO representatives are identifying access challenges. The National Institute of Securities Markets (NISM) will train educators to deliver commodity market awareness programs. Pandey also highlighted that SEBI offers regulated gold products through commodity derivatives, gold ETFs (Exchange Traded Funds), and electronic gold receipts (EGRs). He stressed these products are designed to ensure investor protection in the market.
Market regulation
SEBI reviews framework for electronic gold receipts
Pandey said EGRs were introduced to create a regulated gold market and make India a global price center. However, their adoption has been slow. He urged investors to deal only in regulated gold products and said, "We need to review the framework, including GST-related challenges." This shows SEBI's commitment toward ensuring market integrity while addressing potential barriers to participation.