The Security Exchange Board of India (SEBI) will allow India's commodity derivatives market to new participants in a phased manner.

The regulator will allow Alternative Investment Funds (AIFs), a form of non-traditional investments, to get involved in the commodity trade.

SEBI has already written to the Reserve Bank of India (RBI) and ministry of agriculture for comments regarding the decision on permitting AIFs.

Futures contracts are the oldest way of investing in commodities. A producer of a commodity can guarantee a set price for their future production by selling contracts on a futures exchange.

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