Multi Commodity Exchange of India (MCX) shares jumped 5% on Wednesday following reports that the Securities and Exchange Board of India (SEBI) is considering expanding participation in the commodity derivatives market.

Such a move would deepen liquidity and strengthen MCX's long-term growth prospects. 

According to multiple reports, SEBI Chairman Tuhin Kanta Pandey said the regulator is in talks with the government to allow banks and pension funds to trade in commodities, a step aimed at strengthening the country's commodity markets. He also added that SEBI is exploring the possibility of permitting Foreign Portfolio Investors (FPIs) to participate in non-cash settled, non-agricultural derivatives contracts.

According to Pandey, these measures are part of SEBI's broader agenda to deepen the commodity derivatives market and bring greater institutional participation. Increased participation from large financial institutions is expected to improve liquidity, transparency, and overall market efficiency.

Analyst Take

If implemented, SEBI's plans to allow banks and pension funds into commodity markets could be positive for MCX, said SEBI-registered analyst Equity Insights Elite.

The regulator is also considering permitting FPIs to trade in non-agricultural derivatives, which would boost overall market participation.

Stock Watch

At the time of writing, MCX was the top trending stock on Stocktwits, though retail sentiment remained 'neutral'. It was 'bullish' six months ago.

However, despite the lukewarm sentiment, the stock has gained more than 66% in the last six months.

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