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Foreign Portfolio Investors (FPIs) can now have Direct Market Access (DMA) when participating in Exchange Traded Commodity Derivatives (ETCD).
DMA facility allows FPIs to directly access the exchange trading system through the broker's infrastructure to place orders without manual intervention by the broker.
This will result in the FPIs enjoying, direct control, reduced costs, confidentiality, faster execution and associated risks when acting through the brokers.
This step will again act as an impetus to the growing participation of institutional investors and contribute to the liquidity in the exchange traded commodity’s market.
Permissibility of the facility is subject to certain conditions that require brokers to follow procedure for application for DMA, operational specifications, client authorisation, and broker-client agreement, risk management, among others.
SEBI directions issued under the circular allowing FPIs to participate in ETCDs will continue to remain applicable.
Stock Exchanges are directed to amend its laws to facilitate this.
The provisions of this circular will be effective immediately.
JC Key Takeaways:
1) Participation of the FPIs in the exchange traded commodity will be encouraged.
2) DMA facility will also help the brokers to increase their business opportunities by onboarding an increased number of FPIs as their client.
For further details, please see:
https://www.sebi.gov.in/legal/circulars/may-2023/direct-market-access-dma-to-sebi-registered-foreign-portfolio-investors-fpis-for-participating-in-exchange-traded-commodity-derivatives-etcds-_71069.htmlFor any queries/clarifications, please feel free to ping us and we will be happy to chat: