The Securities and Exchange Board of India (SEBI) has approved Deutsche Bank to offer custody services to support domestic financial institutions looking to trade commodity derivatives.
With the regulator’s approval, Deutsche Bank becomes the first and only custodian to launch commodity custody in India.
To begin with, the SEBI approval permits commodity custody services in gold, crude and natural gas and commodity indices.
The local government and regulators in India have been focused on developing a “vibrant commodities market”, said Deutsche Bank, to improve and stabilise price discovery for both agricultural and non-agricultural commodities.
Deutsche Bank highlighted that it is looking to lead efforts to enable participation of institutional investors, such as mutual funds and alternative investment funds in the commodity derivatives segment.
“We are delighted to be able to provide commodity custody services to domestic financial institutions, who are now be able to add commodities as an asset class to their investment proposition,” Sriram Krishnan, head of securities services, India at Deutsche Bank.
“This development not only addresses a long-standing demand from institutional investors, but it is also in line with SEBI’s objective to open up the commodities market by enabling asset managers to participate in this important sector, for a start.”
In September, Deutsche Bank launched a web-based platform enabling easier access to invest in India, a move that could significantly boost foreign investor activity in the country.
The launch of the AccessIndia platform aims to automate digital market entry to expedite licensing for foreign portfolio investors (FPIs). It is designed to help foreign investors, such as asset managers and insurance companies, to set up new investment vehicles in India.