SEBI opens noncash-settled nonagricultural commodity derivatives to FPIs in India
SEBI just made it easier for foreign portfolio investors (FPIs) to trade in India by letting them access a wider range of commodity derivatives: think things like nonagricultural index and other noncash-settled contracts.
The goal? To bring more action and liquidity to the market.
FPIs face 3-day close-out before expiry
To keep risks low, FPIs trading in non-cash-settled non-agricultural commodity derivatives have to close out their trades before the delivery period kicks in (that's three days before contracts expire).
They also can't add new positions after that point.
Residual open positions before the start of the Tender Period can be devolved to the TM/TCM at the closing price or daily settlement price declared by the exchange on the day the positions are devolved, so FPIs don't have to worry about dealing with physical delivery hassles.