SEBI amends commodity norms to allow options

index.jpgSource: The Hindu Business Line, Jan 19, 2017

Mumbai: SEBI has sought public comments to the proposed amended to the commodity regulations to allow trading in options.

SEBI said one design being considered is options with commodity futures contracts as underlying, and the option to settle by devolving into the commodity futures contracts on expiry.

This being a complex product, there is a need to assess whether Indian commodity derivatives markets are ready for such complex products and whether such products provide for regulatory and tax arbitrage, it said.

However, SEBI said this design is most prevalent and most accepted in the commodity derivatives exchanges globally. This alternative also seems to be most suitable for agricultural commodities where cash settlement is not appropriate because of lack of ready availability of robust spot market prices of the underlying commodity of the specified grade and variety.

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