Now PMSes can participate in commodity derivatives

NEW DELHI: With an objective to boost participation in the commodities market, the Securities and Exchange Board of India (Sebi) on Wednesday allowed portfolio managers to participate in commodities derivatives on behalf of their clients.

The regulator in a release said that portfolio managers may participate in Exchange Traded Commodity Derivatives (ETCD) after entering into an agreement with the clients.

“Portfolio managers may execute addendums to the agreement with their existing clients, permitting the portfolio managers to participate in the ETCD on their behalf,” Sebi said.


Earlier, Sebi on Tuesday had allowed mutual funds to invest in ETCD, except those in sensitive commodities.

In a circular, the regulator said that no mutual fund schemes can invest in physical goods except in 'gold' through Gold Exchange Traded Funds (ETFs).

ETCDs having gold as the underlying, shall also be considered as 'gold related instrument' for Gold ETFs.

Mutual funds can make investments in ETCDs through hybrid schemes and Gold ETFs.

"As mutual fund schemes participating in ETCDs may hold the underlying goods in case of physical settlement of contracts, in that case mutual funds shall dispose of such goods from the books of the scheme, at the earliest, not exceeding 30 days from the date of holding of the physical goods," Sebi said.