Capital market regulator on Saturday said its looking at a single investor protection fund for all products being offered on stock exchanges. Its Chairman Tuhin Kanta Pandey also said that SEBI has initiated dialogue with banking regulator and insurance sector regulator for participation of banks and insurance companies in commodity derivative trading market.
“Presently, stock exchanges maintain distinct Investor Protection Funds (IPF) – one for products such as equity, bonds, equity derivatives, etc. and another for the commodity segment. We are examining a proposal to have a single IPF for all products offered by an exchange,” Pandey said while addressing a conference on commodity market here.
In order to increase investor base as well as provide for more regulations, SEBI is engaging with RBI and IRDAI to enable participation of banks and insurance companies in commodity derivatives market. “Enhanced institutional participation will bring in higher liquidity, making the market more attractive for hedging,” Pandey said. Commodity derivatives markets have been under SEBI’s oversight since 2015.
Beyond institutional participation, Pandey highlighted the need to address taxation-related hurdles. “We will have to work closely with the GST Council Secretariat and the GST Council to resolve some of these critical issues to truly spur the development of commodity markets,” he said, adding that this is especially important for both agricultural and non-agricultural segments, including gold.
As on date, 104 distinct commodities and their variants have been notified for trading on recognised stock exchanges. A diverse range of 34 unique commodities are available for trading – 23 agricultural commodities and 11 non-agricultural commodities. The annual notional turnover in FY 2024-25 reached ₹580 trillion – almost doubling from FY 2023-24. As on October 31, 2025, the notional turnover has already reached ₹628 trillion.
Working group to look into non-agri commodity derivatives
Further, Pandey said that working groups have been set up to suggest measures to deepen the agri commodity derivatives ecosystem. “These expert groups, among other things, are reviewing whether the regulatory framework pertaining to margins, position limits, and delivery and settlement mechanism can be optimised without affecting market integrity,” he said.
Based on the recommendations, regulators will take necessary developmental measures after due consultation with all stakeholders. “The Working Group to review the non-agri commodity derivatives segment will be notified shortly,” Pandey said.
He also urged commodity market players to see people to invest in regulated gold products. He noted that Indian markets already offer a range of regulated gold products through commodity derivatives, gold exchange-traded funds (ETFs) and electronic gold receipts (EGRs), all of which ensure investor protection. He said EGRs were envisioned to create a regulated market for gold trading and position India as a global price discovery centre for the precious metal.
However, he acknowledged that the EGR framework has not gained the desired traction so far and requires a review. “I think there are GST challenges around it,” Pandey said, urging industry participants to educate investors and encourage them to deal only in regulated gold products.