SEBI examining position limits for non-agri contracts to boost liquidity
SEBI Chairman Tuhin Kanta Pandey announced that the regulator is reviewing position limits for non-agricultural commodity contracts to improve market liquidity. The initiative aims to modernize commodity derivatives while ensuring risk controls and better access for farmers and MSMEs.
Why it matters
Reforms in commodity derivatives are crucial for price discovery and risk management for agricultural and industrial stakeholders in India.
Market regulator SEBI is examining position limits for non-agricultural contracts to improve liquidity and depth without weakening risk controls, its chairman Tuhin Kanta Pandey said on Saturday (October 3, 2026).
Speaking about reforms in the commodity derivatives market, Mr. Pandey said the market design should allow contracts to gain scale. In some agricultural commodities, physical settlement from the outset can impede market development, and a phased approach could allow contracts to mature before physical settlement becomes mandatory.
He said SEBI has completed consultations on the matter and guidelines will follow.
The regulator is also working to reduce structural friction in commodity markets, including engaging with stakeholders on GST-related issues affecting participants who give or receive commodities through exchange platforms.
Mr. Pandey said technology should serve the specific needs of commodity markets, which include producers, commercial users, farmers, processors, and physical hedgers.
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