Sebi panel weighs proposal to open physically settled commodity trades to FPIs

A Sebi-constituted Commodity Derivatives Advisory Committee is discussing a proposal to allow FPIs to trade physically settled non-agricultural commodity derivatives such as bullion and base metals, by empowering clearing members to square off FPI positions two days before the tender period. The move aims to resolve the GST hurdle, since FPIs are not registered under the GST framework and cannot take or give physical delivery on Indian exchanges. Currently, FPIs can only trade cash-settled non-agri commodities like crude oil and natural gas, a segment Sebi opened in June 2022; bullion, base metals and agri derivatives remain physically settled on expiry.