SEBI Mulls Weather, Freight Derivatives

Regulator also looking at ETFs on metals to make commodity segment more efficient.

- Ashish Rukhaiyar

For the first time ever, the Securities and Exchange Board of India (SEBI) is actively examining the feasibility of allowing derivatives contracts based on intangibles such as weather or freight in the Indian commodity segment.

As part of its attempts to make the commodity segment more efficient and investor-friendly, the regulator is also looking at exchange-traded funds (ETFs) on metals, better-designed options contracts and ways to increase participation of hedgers and encourage delivery based settlement.

According to two persons familiar with the matter, the capital markets regulator has formed around five working groups, with each group tasked with a specific issue related to the commodities segment.