Sebi proposes cash settlement for select agri derivatives to revive volumes
Sebi proposes cash settlement for select agricultural derivatives to boost liquidity and revive trading activity in thinly traded commodities.Summary
The Securities and Exchange Board of India (Sebi) has proposed allowing cash-based settlement for select agricultural commodity derivatives to increase participation and address low trading volumes. Currently, physical settlement is mandatory, but Sebi's proposal would permit cash settlement until specific liquidity thresholds are met, after which contracts would transition to physical delivery. This pilot framework targets commodities like maize, groundnut, and chilli, which face structural weaknesses due to seasonal nature and regulatory constraints. The move aims to revitalize India's agricultural derivatives market, which has suffered from weak volumes and participation due to prolonged trading bans and strict physical settlement requirements.
(Source：Mint)