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India’s market regulator, the Securities and Exchange Board of India (SEBI), has said it will now place greater emphasis on the development of the commodity market, similar to the focus given to equities over the years.

Speaking at an event organised by the Commodity and Capital Participants Association of India (CPAI), SEBI Chairman Tuhin Kanta Pandey said that despite global economic uncertainty, Indian markets have carved out a strong global reputation for stability and resilience.

Pandey said the steady rise in new and unique investors reflects growing confidence in India’s regulatory framework and market systems. He noted that capital markets have expanded rapidly across segments such as equity and commodity derivatives, mutual funds and alternative investment funds.

Moreover, he pointed out that powerful commodity derivatives have been instrumental in the market volatility management and also in the price discovery process during the uncertain times in an easier manner.

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Commodity movement in terms of trading caught the attention of the SEBI chairperson who mentioned a significant increase in the trading of nickel futures immediately after their reintroduction in August 2025. According to him, trading volumes and the number of participants have gone up enormously in comparison to the last financial year.

Pandey said the renewed interest in nickel futures signals improving depth and efficiency in India’s commodity derivatives market.

Working groups formed for commodity reforms

In its endeavor to enhance the ecosystem, SEBI has constituted working groups to examine the derivatives of agricultural commodities. The working groups are looking into various aspects such as margins, position limits, delivery processes, and settlement mechanisms. He mentioned that the new working group specifically for non-agricultural commodity derivatives would soon be set up to handle the problems related to the market.

As far as the Electronic Gold Receipts are concerned, Pandey recognised that the progress has not met the expectations till now. He announced that SEBI is still in the process of reviewing the framework and trying to fix the GST-related problems, so that adoption can be improved. According to the regulator, the removal of tax and operational barriers will result in the full potential of gold-based market instruments being realised.

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SEBI Whole-Time Member Kamlesh Varshney announced changes that will bring relief to brokers and intermediaries. He said the penalty framework has been simplified, and going forward, only one penalty will be levied for a single default. This move, he said, is aimed at reducing compliance burden while maintaining market discipline.

Varshney also praised the National Stock Exchange for developing PaRRVa, a real-time algorithm verification system designed to strengthen market oversight. He said that just as equity markets benefitted from sustained regulatory focus, the time has now come to push commodity markets forward. Discussions with the Reserve Bank of India and IRDAI on commodity market-related issues are currently underway.