Guidelines to Operationalize Options on Goods

SEBI, in consultation with Commodity Derivatives Advisory Committee (CDAC) and vide Circular SEBI/HO/CDMRD/DMP/CIR/P/104 dated September 28, 2016, issued guidelines for trading of options in Commodity Derivatives Market. Initially, ‘Options’ were permitted for trading on only on those commodity futures as underlying, which are traded on exchange platforms with some specific criteria. Thereafter, the government notification dated October 18, 2019, paved the way for introduction of ‘options on Goods’. Accordingly, SEBI vide circular dated January 16, 2020, issued necessary guidelines on product design and risk management framework to operationalize ‘Options on Goods’ in the commodity derivatives market in addition to ‘Options on Commodity Futures’.