Market regulator, SEBI adds diamond, base metals and alloys to liquid assets list in commodities derivatives

Capital markets regulator Securities and Exchange Board of India (SEBI) added diamond, base metals and alloys to the list of eligible liquid assets for the commodity derivatives segment. Currently, the list of commodities permitted as liquid assets consists of bullion, steel and agricultural commodities.

“Considering the introduction of compulsory delivery-based diamond and base metal derivatives contracts and feedback received from the stakeholders, it has been decided to include diamond, base metals and alloys in the list of permissible liquid assets,” the regulator said in a circular.

This is subject to minimum applicable haircut and concentration limits, which clearing corporations may accept from their members. The minimum applicable haircut is 40 per cent for diamond and 30 per cent for base metals and alloys, Sebi said.

Besides, it also mentioned that the minimum haircut stipulated for steel now stands revised to 30 per cent from the current applicable level of 60 per cent since steel is an alloy. The regulator further said “all commodities to be accepted as collateral should be of same quality specification which is deliverable under the contract specification of commodity derivatives being traded on the exchange”.

Shekhar Ghosh is consulting editor, He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at

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