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The Ministry of Finance, under the Department of Economic Affairs, announced significant updates to the Securities Contracts (Regulation) Act of 1956, through two critical notifications that reshape the landscape of derivatives and commodity trading in India.

The first notification, numbered S.O. 1003(E), expands the definition of derivatives under the Act. It supersedes the previous notification from October 18, 2019, but retains the legal standing of actions taken prior to this change. Under this new directive, contracts for purchasing or selling rights to buy or sell goods in the future are officially recognized as derivatives. This move aims to enhance the transparency and regulation of derivative trading, ensuring a more robust legal framework for market participants.

In a complementary notification, S.O. 1002(E), the Ministry, in consultation with the Securities and Exchange Board of India (SEBI), has updated the list of commodities eligible for trading. This list encompasses a wide range of goods under various categories such as cereals and pulses, oilseeds, spices, metals, precious metals, and more, extending to energy sources, chemicals, and even services like freight and weather. The inclusion of a diverse array of commodities from agricultural products like rice, wheat, and spices to metals and energy resources like crude oil and natural gas reflects the government’s aim to diversify the commodity market and provide more trading opportunities.

These updates mark a significant shift in the regulatory framework governing financial markets in India, particularly in derivatives and commodity trading. By defining a broader spectrum of goods and financial instruments as tradable commodities and derivatives, the government seeks to enhance market liquidity, provide more hedging options, and promote agricultural and industrial sector participation in the commodity markets.

The list of notified commodities includes staples of the Indian agricultural economy, such as various types of grains, pulses, and oilseeds, alongside global commodities like gold, silver, and crude oil. This extensive list signifies the government’s intention to create a more inclusive market, enabling stakeholders across various sectors to participate in commodity trading, hedge against price volatility, and contribute to a more dynamic and transparent market ecosystem.

The notifications are a part of the government’s ongoing efforts to reform and strengthen the financial and commodity markets in India. By updating and expanding the legal framework, the Ministry of Finance aims to ensure that India’s financial markets remain competitive, resilient, and capable of supporting the country’s economic growth and stability.

These changes come into immediate effect, reflecting the government’s commitment to responsive and proactive market regulation. Market participants are encouraged to familiarize themselves with the new regulations and adjust their trading strategies accordingly to leverage the opportunities presented by this regulatory evolution.

***

MINISTRY OF FINANCE

(Department of Economic Affairs)

NOTIFICATION

New Delhi, the 1st March, 2024

S.O. 1003(E).—In pursuance of the provision of sub-clause (D) of clause (ac) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956), and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Economic Affairs vide number S.O. 3743(E), dated the 18th October, 2019, published in the Gazette of India, Extraordinary, Part-II, Section-3, sub-section (ii) dated the 18th October 2019, except as respects things done or omitted to be done before such supersession, the Central Government hereby declares a contract for the purchase or sale of a right to buy or sell, or a right to buy and sell in future, such underlying goods, as notified under clause (bc) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956), as a derivative for the purposes of the said Act.

[F. No. 17/2/2016-CD (part -II)]
Ms. SURBHI JAIN, Jt. Secy.

****

MINISTRY OF FINANCE
(Department of Economic Affairs)
NOTIFICATION
New Delhi, the 1st March, 2024

S.O. 1002(E).In exercise of the powers conferred by clause (bc) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956), and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Economic Affairs) number S.O. 3068(E), published in the Gazette of India, Extraordinary, Part-II, Section 3, sub-section (ii), dated the 27th September, 2016, except as respects things done or omitted to be done before such supersession, the Central Government, in consultation with the Securities and Exchange Board of India established under section 3 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), hereby notifies the goods specified in the Schedule for the purposes of clause (bc) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956), namely: –

SCHEDULE

Sl. No. Goods
(1) (2)
(I) CEREALS AND PULSES
1. Bajra
2. Barley
3. Gram (including Dal)
4. Jowar
5. Kulthi
6. Lakh (Khesari)
7. Maize or Corn
8. Masoor (including dals)
9. Moong and Products (including Chuni, Dal)
10. Moth
11. Peas (including Yellow Peas)
12. Ragi
13. Rice or Paddy (Including Basmati)
14. Small Millets (KodanKulti, Kodra, Korra, Vargu, Sawan, Rala, Kakun, Samai, Vari and Banti)
15. Tur or Arhar (Including Chuni, Dal)
16. Urad or Mash (Including Dal)
17. Wheat
(II) OILSEEDS, OILCAKES AND OILS
18. Castor Complex (including seed, oil, oilcake)
19. Coconut or Copra complex (including seed or fruit, oil, oilcake)
20. Cottonseed complex (including seed, oil, oilcake)
21. Palm oil complex (including seed, oil, oilcake)
22. Groundnut complex (including nut, oil, oilcake)
23. Linseed complex (including seed, oil, oilcake)
24. Rapeseed Mustardseed complex (including seed, oil, oilcake, meal)
25. Rice bran complex (including bran, oil, oilcake)
26. Safflower complex (including seed, oil, oilcake)
27. Sesamum complex (including seed, oil, oilcake)
28. Soy complex (including bean, oil, oilcake, meal)
29. Sunflower complex (including seed, oil, oilcake)
(III) SPICES
30. Aniseed
31. Cardamom
32. Celeryseed
33. Chillies
34. Cinnamon
35. Cloves
36. Coriander seed
37. Garlic
38. Ginger
39. Jeera (Cumin seed)
40. Methi
41. Nutmegs
42. Pepper
43. Turmeric
(IV) FRUITS AND VEGETABLES
44. Apple
45. Onion
46. Potato
(V) METALS
47. Aluminium and Aluminium Alloys
48. Brass
49. Copper and Copper Alloys
50. Iron Ore
51. Lead and Lead Alloys
52. Manganese
53. Nickel and Nickel Alloys
54. Pig Iron
55. Sponge Iron
56. Steel
57. Tin
58. Zinc and Zinc Alloys
(VI) PRECIOUS METALS
59. Gold (including variants such as coins, bars, etc.)
60. Palladium (including variants such as coins, bars, etc.)
61. Platinum (including variants such as bars, etc.)
62. Silver (including variants such as coins, bars, etc.)
(VII) GEMS and STONES
63. Diamond
(VIII) FORESTRY
64. Betelnuts
65. Seedlac
66. Shellac
67. Processed products of Bamboo
68. Processed products of Timber
(IX) FIBRES
69. Art Silk Yarn
70. Cotton complex (including Kapas, fibre, loose, half-pressed, full-pressed, yarn, pods, cloth)
71. Jute and Jute goods (including raw jute, mesta, hessian, sackings, cloth, bags, twines, yarns and any other products made of jute)
72. Staple Fibre Yarn
(X) ENERGY
73. Carbon Credit
74. Coal (including variants such as coking, thermal, lignite, etc.)
75. Crude Oil
76. Electricity
77. Bio-fuel (Including Ethanol, Bio-diesel)
78. Furnace Oil
79. Gasoline or Petrol
80. Diesel
81. Methanol
82. Natural Gas
(XI) CHEMICALS
83. Bitumen
84. Polymer
(XII) CONSTRUCTION
85. Cement
(XIII) SWEETENERS
86. Gur
87. Sugar (including S, M and other grades and khandsari)
(XIV) PLANTATION
88. Cocoa
89. Coffee
90. Rubber
91. Tea
(XV) DAIRY AND POULTRY
92. Eggs
93. Skimmed Milk Powder
94. White Butter
(XVI) DRY FRUITS
95. Cashew
96. Almond
(XVII) ACTIVITIES, SERVICES, RIGHTS, INTERESTS AND EVENTS
97. Freight including trucks, waterways, railways, airways
98. Weather
(XVIII) OTHERS
99. Camphor
100. Chara or Berseem (including chara seed or berseem seed)
101. Gram Husk (Gram Chilka)
102. Guar Seed and products (including Guar Gum split, Guar Gum powder, Korma, Churi)
103. Isabgol
104. Mentha Oil and Products (including Crystals, Flakes, etc.).

[No. 17/2/2016-CD (part -II)]

Ms. SURBHI JAIN, Jt. Secy.

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