InvestorQ : What are the broad contours of the commodity market trading in India and how has SEBI regulation changed the market?
sara Kunju made post

What are the broad contours of the commodity market trading in India and how has SEBI regulation changed the market?

Answer
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Rutuja Nigam answered.
1 year ago


Trading on the commodity trading in India has picked up in a big way in India in the last few years. Broadly, there are four categories of commodities that are traded on the commodity futures market viz. precious metals industrial metals, energy products and agricultural commodities. While commodity trading in agricultural products is dominated by NCDEX, it is the MCX that dominates commodities trading in metals, precious metals and crude oil. Today, like your equity trading account, it is also very easy to open a commodity online account where you can buy and sell futures of metals and agricultural commodities. Commodity trading in India is used extensively to hedge risk.

Till 2016, commodity markets were regulated by the Forward Markets Commission (FMC). However, post 2016 commodity futures market has come under the direct regulation of SEBI. Thus SEBI is able to get its best practise of regulating equity derivatives to commodities too. There is an interesting point to remember here. SEBI only regulates the commodity futures and options trading. Any trading in spot commodities are regulated by the respective state government and the respective ministry that it reports into at a national level.