SEBI Approved Mutual Fund Entry in Commodity Market

     

After a long days discussion with Mutual Fund Industries and Portfolio Managers (PMS),  SEBI has now granted approval for entry in commodity market by these financial institutions. The market was awaiting this from a long day. After SEBI approval now the path is clear. Till now these industries were not allowed to directly participate in commodity markets. They were building the investor's portfolio by equity share of mining and commodity company. But now after approval and implementations, which will take a few months, these industries can participate in the commodity market too. 

Analyst believe that this step taken by the market regulator (SEBI) will benefit in various ways such as volume will increase, transparency will come and better price discovery will be seen. Although this will take a few months or may be implemented in the next financial year.   

Mutual Funds organizations and portfolio managers have to prepare for this, that will take some time. They have to change their prospectus, will introduce it in public, advertise it and shape it as per their requirements and investor demand. 

In talks with Zee Business, MD & CEO of MCX Mrugank Paranjape said that it may take 2-3 months or maybe implement in next financial year. He also said that on 28th of February a seminar was organized by FICCI in this matter, with various market participants in which a detailed discussion was held.

In reply to another question, he said that after implementation of this step commodity market depth will improve, because of various type of participants in the market. He said that volume, transparency and price discovery all will improve and commodity market will be more healthy.

Mutual Fund industry may appoint commodity analyst of the various segment and they can appoint for both agri and non-agri commodity for the better portfolio management of their investors. On the other hand, the investor can take indirect exposure in commodity market through Mutual Funds and their investment horizon will expand with less risk.  

Time will tell how this step will benefit the investors of Mutual Funds and how much participation and interests are taken by them. We can only expect that both investor and industry will be benefited after this step of SEBI.

What you think about it and how much you welcome this step?

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