New Delhi: Following the permission given by the Security Exchange Board of India (SEBI) and the Multi Commodity Exchange of India (MCX), the Foreign Portfolio Investors (FPIs) have started trading in the commodity segment in India. Ohm Dovetail Private Ltd. (Ohm Dovetail), a leading clearing member, facilitated the first-ever trading in India’s MCX by a Category I FPI in this segment. This milestone achievement comes after the recent regulation that permits FPIs to invest in commodities in India.
The circular outlined the guidelines and procedures for FPIs to trade in the commodity market, ensuring a smooth and seamless experience for all investors.
“The first Category I FPI trade on the exchange took place on April 21. We are proud to report that it was cleared by Ohm Dovetail, the first clearing member in the country to clear Category I FPI trades in the commodity segment. The trade was executed without any glitches, reflecting the robustness of our trading and clearing systems,” said Mr. Vivek Singhania, Co-founder and Director, Ohm Dovetail Pvt. Ltd.
Since the launch, the FPI volume in the commodity market is expected to grow steadily.
“We are confident that this trend will continue, and the participation of FPIs in the commodity market will deepen liquidity and create more opportunities for investors. We appreciate the valued stakeholders and the SEBI for their support in this journey, and we look forward to witnessing huge transformation in commodity trading especially in energy and precious metal segments, going forward,” added Mr. Singhania.
The MCX circular outlined the guidelines and procedures for FPIs to register and trade in the commodity market.
In its Circular MCX said that FPIs other than individuals, family offices, and corporates are eligible to participate in the aforementioned contracts. The allowable position limits for this category of FPIs will be the same as the applicable client-level position limits of the respective eligible cash-settled contracts, subject to all rules, and regulations issued by SEBI and the Exchange, from time to time.
SEBI also issued a relevant circular allowing FPIs to participate in Exchange Traded Commodity Derivatives (ETCDs) in India. FPIs will be subject to certain conditions, including risk management measures and position limits. “Stock Exchanges and Clearing Corporations may specify additional safeguards/conditions. This circular is issued with the approval of the competent authority and is effective immediately. Stock Exchanges are advised to make necessary amendments and communicate the status of implementation to SEBI. This circular is issued under Section 11(1) of the Securities and Exchange Board of India Act, 1992.”
After the MCX circular, Ohm Dovetail made necessary amendments within two months to facilitate trading for their clients.