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Participation of Eligible Foreign Entities (EFEs)in the commodity derivatives market

Currently, foreign entities are not permitted to directly participate in the Indian commodity derivatives market, even if they import/export various commodities from/to India. It has been decided to permit foreign entities having actual exposure to Indian commodity markets, to participate in the commodity derivative segment of recognized stock exchanges for hedging their exposure. Such foreign entities shall be known as “Eligible Foreign Entities” (EFEs).
Criteria for Eligible Foreign Entity:

  1. Minimum net-worth of US $ 5,00,000.
  2. Such FE shall have actual exposure to Indian physical commodity markets.
  3. Such FE is resident in a country/jurisdiction whose securities market regulator and/or commodity derivatives market regulator is a signatory to IOSCO’s MMoU or a signatory of a bilateral MoU with SEBI.
  4. If such EFEs are also registered with SEBI as Foreign Portfolio Investors or Foreign Venture Capital Investors, they are permitted to participate in commodity derivatives markets as EFE provided that they have actual exposure to Indian physical commodity markets and subject to conditions that there is a clear segregation of funds/ securities/commodities under the respective registrations.

https://www.sebi.gov.in/legal/circulars/oct-2018/participation-of-eligible-foreignentities- efes-in-the-commodity-derivativesmarket_ 40649.html