BIG changes likely in commodity derivatives rules; SEBI seeks feedback on easing norms

The Securities and Exchange Board of India (SEBI) has proposed a series of changes to derivatives market regulations aimed at simplifying compliance, improving operational flexibility, and reducing duplication in rules across exchanges.

The market regulator has invited public comments on the proposals till June 4, 2026.

SEBI proposes easier commodity derivatives framework

SEBI has proposed removing the “Close To Money” (CTM) concept in commodity options trading. The move is aimed at making trading and risk management processes simpler for exchanges and market participants.

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The regulator has also suggested reducing the number of Product Advisory Committee (PAC) meetings for commodity derivatives. At present, non-agri commodity contracts require at least two PAC meetings every year. Under the proposal, exchanges may need to hold only one meeting annually.

Exchanges may get more flexibility during emergencies

SEBI has proposed allowing the Managing Director (MD) of exchanges to change contract expiry dates in emergency situations.

The proposal is aimed at dealing with disruption by events such as festivals, strikes, bad weather or other unforeseen events that may affect trading activity.

Position monitoring may be outsourced

Under the proposed framework, stock exchanges may be allowed to outsource position limit monitoring to clearing corporations.

SEBI has suggested that exchanges and clearing corporations should enter into a formal agreement for such arrangements.

Newspaper disclosures may be discontinued

The regulator has also proposed discontinuing mandatory newspaper publication requirements for derivatives-related disclosures.

Instead, exchanges may publish such disclosures on their official websites. SEBI believes this could improve efficiency and reduce compliance burden.

In another proposed change, exchanges may no longer need to separately submit Index Derivatives Product Success Reports to SEBI. The reports could instead be disclosed directly on exchange websites.

Old rules may be removed after regional exchanges closure

SEBI has proposed removing outdated provisions related to regional stock exchanges and Nationwide Trading Terminal rules, calling them irrelevant after the closure of regional exchanges.

The regulator has also proposed merging several commodity derivatives chapters with equity derivatives rules. The move is aimed at reducing duplication and making compliance easier for market infrastructure institutions and exchanges.

SEBI plans overhaul of municipal bond rules

Separately, SEBI has proposed changes in municipal bond rules to help cities raise more money for infrastructure projects.

The changes are aimed at improving funding for roads, water supply, sanitation, and public transport projects.

Municipal bonds are issued by local bodies to raise funds for development work. However, India’s municipal bond market remains small due to weak finances and low investor participation.

In the last nine years, around 20 Indian cities have raised nearly Rs 4,500 crore through such bonds.

One key proposal is to allow multiple cities to jointly raise funds through a common platform. This could help smaller cities access the bond market more easily.