What happened
SEBI is in final-stage discussions to allow co-location in India's commodity derivatives market, with a rollout likely in H1 2027.
India's market regulator SEBI is reportedly in the final stages of discussions to allow co-location services in the country's commodity derivatives market, with a rollout likely in the first half of 2027, according to three people aware of the development who spoke to Livemint on condition of anonymity.
Co-location lets trading participants place their servers and IT equipment inside an exchange's data centres, cutting the time it takes for orders to reach the market — where every millisecond can make a difference in trading outcomes.
Under SEBI's existing rules, co-location is not permitted in the commodities segment. The regulator's Master Circular for the Commodity Derivatives Segment (dated August 4, 2023) explicitly prohibits co-location or any facility that puts some members at a disadvantageous position versus others. Co-location, by contrast, has been available in Indian equities for over two decades, and the proposed c
The proposal is discussed at every meeting of SEBI's Commodity Derivatives Advisory Committee (CDAC), one source said. SEBI may initially restrict co-location to non-agricultural commodities, because several farm contracts are categorised as shallow, with low volumes and poor liquidity. A Reuters report from December 2025 said a SEBI panel was inclined to allow co-location in metals and energy, wi
The move does not come out of nowhere: SEBI's CDAC was actively discussing the idea as early as May 2025, industry body ANMI has separately lobbied for a faster rollout, and MCX — which dominates India's commodity derivatives trading and moved to a TCS-backed platform in late 2023 — has been in favour of offering such services.
The timing is significant because it fits into a broader opening of India's commodity derivatives market to institutional participation. In a consultation paper issued on August 11, 2026, SEBI proposed letting foreign portfolio investors (FPIs) trade non-agricultural index derivatives and physically settled non-agri commodity derivatives, provided they square off or roll over positions before the
What is confirmed
Facts corroborated by the sources listed below.
- SEBI is in final-stage discussions to allow co-location in the commodity derivatives market, with rollout likely in H1 2027, per three anonymous sources cited by Livemint.
- Current SEBI rules (Master Circular, Aug 4 2023) prohibit co-location in the commodity derivatives segment.
- Co-location may initially be restricted to non-agricultural commodities (metals and energy), with agri excluded due to shallow market depth and inflationary concerns.
- SEBI's Aug 11, 2026 consultation paper proposed wider FPI participation in non-agri commodity derivatives; CDAC has backed the proposals.
Why it matters for me
Traders could host servers in exchange data centres, cutting latency; commodity markets would align with global and equity-market norms; institutional (FPI) participation could deepen.
Market Structure · Technology Access
Commodity Traders And Prop/algo Trading Firms · MCX And Other Commodity Exchange Participants
Commodity traders, especially algo/prop firms, could place servers in exchange data centres from H1 2027, cutting order latency.
Market Access · Liquidity
FPIs And Institutional Investors Eyeing Indian Commodities
Alongside proposed FPI expansion, institutional participation in Indian commodity derivatives could widen, deepening liquidity.
Market Fairness
Brokers And Market Infrastructure Professionals · Hedgers In Metals, Energy And Agri Value Chains
Small participants without co-location budgets could face a speed disadvantage; agri contracts may be excluded, leaving shallow segments unchanged.
What to remember
It is likely coming in H1 2027 (metals/energy first, agri excluded), but no official SEBI circular exists yet — treat as probable, not done.
SEBI is reportedly close to allowing co-location in commodity markets — rollout likely H1 2027, metals and energy first, agri excluded. No official circular yet.
Verified sources (8)
Sebi likely to allow co-location for commodity markets next year
↗India market regulator panel to recommend easing rules for commodity derivatives
↗Sebi may allow colocation in commodity bourses to boost efficiency
↗Master Circular for Commodity Derivatives Segment (4 Aug 2023)
↗Consultation Paper on FPI Participation in Exchange Traded Commodity Derivatives (11 Aug 2026)
↗SEBI proposes wider FPI participation in non-agri commodity derivatives
↗SEBI panel may ease curbs on commodity derivatives, lift agri trading ban
↗ANMI seeks faster roll-out of co-location in commodity markets
↗Claims and linked sources
5 claimsSEBI is in final-stage discussions to allow co-location in the commodity derivatives market, with rollout likely in H1 2027, per three anonymous sources cited by Livemint.
Current SEBI rules (Master Circular, Aug 4 2023) prohibit co-location in the commodity derivatives segment.
Co-location may initially be restricted to non-agricultural commodities (metals and energy), with agri excluded due to shallow market depth and inflationary concerns.
SEBI's Aug 11, 2026 consultation paper proposed wider FPI participation in non-agri commodity derivatives; CDAC has backed the proposals.
Co-location plus expanded FPI access could tighten price discovery, improve liquidity and align India with global standards; SEBI's caution stems from past manipulation concerns and physical-delivery links.