SEBI'S GO-AHEAD

FPIs Trading
Commodity
Derivatives
to Get Direct
Market Access
Press Trust of India

New Delhi: Capital markets

regulator Sebi on Wednesday
allowed stock exchanges to
extend direct market access
facility toforeign portfolio in-
vestors (FPIs) for participa:
tion in Exchange Traded
Commodity Derivatives
(ETCDs). The new provision
would come into force with
immediate effect, the Securi-
ties and Exchange Board of
India(Sebi)said inacircular.
Direct Market Access (DMA)
facilitates the clients of a bro-
ker to directly access the ex-
change trading system thro-
ugh thebroker's infrastructure
toplace orderswithout manual
intervention by the broker.
Also, DMA
provides certa
in advantages
€ 3 to brokers such
as direct cont-
5 Over orders,
Aster execu-
ees tion of orders,
2022 allowed reduced risk of
FPISInETCDs CITOIS associa-
to deepen ted with manu-
themarket al order entry,
maintaining
confidentiality, lower impact
costs for large orders and imp-
lementing better hedging and
arbitrage strategies.
Based on representations re-
ceived for enabling DMA facili-
ty to FPIs in ETCDs and delibe-
rations by Commodity Deriva-
tives Advisory Committee
(CDAC) of Sebi, it has been de-
cided to allow stock exchanges
to extend DMAfacility to FPIs
for participation in ETCDs,”
theregulator said.
This permission is subject to
certain conditions that requlre
brokers to follow procedure for
application for DMA, operatio-
nalspecifications, client autho-
risation, and broker-client ag-
reement, risk management,
amongothers.
In September 2022, Sebi allo-
wed FPIs to participate in the
ETCDs in order to increase
depth and liquidity in the mar-
ket. To begin with, the regula-
torpermitted FPIs toparticipa-
te in cash settled non-agricul-
tural commodity derivative
contracts and indices compri-
sing non-agri commodities.