The Securities and Exchange Board of India (SEBI) on Thursday proposed a wide-ranging overhaul of regulations governing exchange-traded derivatives, including commodity derivatives, aimed at simplifying compliance requirements and reducing duplication for exchanges and clearing corporations.
The regulator proposed merging multiple provisions across master circulars, removing outdated norms and streamlining operational requirements for market infrastructure institutions (MIIs). The aim is “simplification of regulatory requirements, removal of redundant provisions, discontinuation of duplication, in order to promote ease of doing business and reduce the compliance burden on exchanges,” SEBI said.
Another key suggestion is removing the “Close to the Money” (CTM) option series mechanism for options in goods in commodity derivatives, in line with leaving global commodity exchanges. The regulator said the concept makes exercise mechanisms complex for participants and introduces uncertainty for option sellers.
SEBI has also proposed reducing the mandatory frequency of Product Advisory Committee (PAC) meetings for non-agricultural commodity derivatives from two meetings a year to one meeting annually, aligning it with norms applicable to agricultural commodities. Exchanges had represented that contract specifications for non-agricultural commodities generally require limited modifications and that participation in such meetings has been low.
The regulator has also eased the requirement for balanced representation in the PAC, which usually comprises Commodity & Capital Participants Association of India, exchange and SEBI officials. Businessline had reported in February that a working group was reviewing ease of doing business measures in the non-agricultural commodity derivatives segment.
Public comments on the consultation paper have been invited till June 4.
Another proposal relates to advancing expiry dates of commodity derivative contracts in case physical markets are shut due to sudden events such as strikes, festivals or erratic weather conditions. “Decision about such advancing expiry of running contract shall be intimated to the trade participants by giving adequate notice before the revised the given circumstances, it is impractical to seek PAC approval for advancing the expiry of a single contract and issue an intimation 10 days in advance,” SEBI said.
Exchanges may also be allowed to outsource monitoring of position limits to clearing corporations through formal agreements clearly defining roles and responsibilities and at arm’s length. Different exchanges currently follow varying practices for monitoring position limits across products and client categories.
Several outdated provisions have also been proposed for removal. SEBI said requirements linked to brokers without nationwide trading terminals have become obsolete following the exit of regional exchanges and adoption of internet-based trading systems.
Similarly, the regulator proposed removing separate certification guidelines for derivatives market participants since such requirements are already covered under SEBI’s certification regulations for associated persons in the securities market.
SEBI has further proposed replacing newspaper disclosures of derivatives transactions with website-based disclosures by exchanges, due to the wider availability of information online.
The regulator also plans to separate regulatory provisions applicable to exchanges and clearing corporations into distinct master circulars, reflecting the increasingly independent roles played by clearing corporations following interoperability and separate clearing member registrations.
Published on May 14, 2026