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SEBI Proposes Major Shift in Agri-Derivatives Rules
13 May
Summary
- SEBI proposes doubling client position limits for agri-commodities.
- Sensitive commodities could see limits rise from 0.25% to 0.5%.
- Revised penalty structure aims for fair risk management.
The Securities and Exchange Board of India (SEBI) has initiated a review of position limits within the agricultural commodity derivatives market. A consultation paper released on Tuesday suggests doubling the client-level position limits for broad agricultural commodities from 1% to 2% of the deliverable supply. For sensitive commodities, the proposed increase is from 0.25% to 0.5% of the deliverable supply.
These proposed revisions are designed to foster greater liquidity and market depth, reflecting the increase in market participants since 2017. SEBI also plans to adjust the classification criteria for broad agricultural commodities, making it easier for more commodities to qualify based on average deliverable supply. Furthermore, the regulator is revising penalty provisions for position limit violations, introducing an upper cap of Rs 2,00,000 for violations exceeding 2% and altering penalties for repeated breaches.
