SEBI Permits FPIs Direct Market Access for Commodity Derivatives on Exchanges

Circular No. SEBI/HO/MRD/MRD-PoD-1/P/CIR/2023/68; dated: 10.05.2023

SEBI has allowed stock exchanges to extend the direct market access (DMA) facility to foreign portfolio investors (FPIs) for participation in Exchange Traded Commodity Derivatives. DMA facilitates the clients of a broker to directly access the exchange trading system through the broker’s infrastructure to place orders without manual intervention by the broker.

Further, DMA offers certain advantages to brokers such as direct control over orders, faster execution of orders, reduced risk of errors associated with manual order entry, maintaining confidentiality, lower impact costs for large orders and implementing better hedging and arbitrage strategies.

This permission is subject to certain conditions that require stock exchanges/brokers to follow the procedure for application for DMA, operational specifications, client authorisation and broker-client agreement, risk management etc.
The circular shall be effective immediately.

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