SEBI proposes additional hedge limit on commodity derivatives
India's market regulator, Securities and Exchange Board of India (SEBI), asked markets on Friday to allow hedgers additional position limits for trading in commodity derivatives and ensure such policies are properly conveyed to participants.
The additional hedge limit proposed is non-transferrable and shall be utilized only by the Hedger to whom the limit has been granted and not by anyone else as per SEBI norms.
SEBI said it was issuing the directive as a way "to facilitate larger participation by genuine hedgers by providing them with necessary incentives with a view to deepen the commodity derivatives market."
"The exchanges shall hence forth stipulate a Hedge Policy for granting hedge limits to their members and clients.The Exchanges shall widely publicize their respective hedge policy by holding awareness programmes for the target participants and making it publicly available on their website." SEBI said in a statement.
The updated norms related to Position Limit for hedgers also included hedge limits for a commodity that would be determined on a case to case basis.
SEBI stated that the hedge limit may also be made available in respect of the short open position acquired by an entity for the purpose of hedging against the stocks of commodities owned by it.