Review of provisions relating to Product Advisory Committee (PAC)

## Report on SEBI Circular SEBI/HO/MRD/MRDPoD-1/CIR/2025/087 Regarding Product Advisory Committees (PACs) for Commodity Derivatives Segment **1. Executive Summary:** This report analyzes SEBI Circular SEBI/HO/MRD/MRDPoD-1/CIR/2025/087, dated June 12, 2025, which amends a provision of the Master Circular for Commodity Derivatives Segment (dated August 04, 2023) related to the frequency of Product Advisory Committee (PAC) meetings. The core purpose of this amendment is to revise the minimum meeting frequency requirement for PACs, specifically for agricultural commodities. The key finding is that the circular relaxes the minimum meeting frequency for PACs dealing with agricultural commodities from twice a year to once a year. **2. Introduction:** This report aims to provide a comprehensive overview of SEBI Circular SEBI/HO/MRD/MRDPoD-1/CIR/2025/087, concerning the Product Advisory Committees (PACs) within the commodity derivatives segment. The analysis is based solely on the information provided within the text of the circular. **3. Policy Overview:** * This circular is an **amendment** to the SEBI Master Circular for Commodity Derivatives Segment, dated August 04, 2023. * The core objective of the underlying policy, based on the provided text, is to provide requirements for stock exchanges and clearing corporations for compliance in the commodity derivatives segment, specifically relating to Product Advisory Committees (PACs). The amendment focuses on optimizing the meeting frequency of these committees. **4. Background and Rationale:** This amendment likely arises from representations received from market participants and deliberations by the Commodity Derivatives Advisory Committee (CDAC) of SEBI. The original requirement of a minimum of two meetings per year for all PACs may have been deemed excessive or unnecessary for PACs focused on agricultural commodities, possibly due to the nature of trading cycles or market activity in those commodities. The amendment, therefore, seeks to provide a more practical and appropriate meeting schedule for agricultural commodity PACs. **5. Key Provisions / Changes:** This circular amends paragraph 2.4.4.i of the Master Circular for Commodity Derivatives Segment, dated August 04, 2023. * **Specific Part Changed:** Paragraph 2.4.4.i. of the Master Circular concerning the proceeding of meetings of the PAC. * **New Rule/Provision:** The revised paragraph 2.4.4.i. states: "The PAC shall meet at least twice a year and more frequently as and when required. However, in case of agricultural commodities, the PAC shall meet at least once a year." * **Difference/Effect of Change:** The amendment reduces the *mandatory* minimum meeting frequency for Product Advisory Committees dealing with agricultural commodities from twice a year to once a year. The original requirement of meeting at least twice a year still applies to PACs focused on other commodities. The amendment introduces flexibility, allowing agricultural PACs to meet less frequently if deemed appropriate. **6. Target Audience and Stakeholders:** The direct target audience and stakeholders affected by this change are: * Recognized Stock Exchanges having Commodity Derivatives Segments. * Managing Directors and Chief Executive Officers of these Stock Exchanges. * Members of the Stock Exchanges. * Market Participants in agricultural commodity derivatives. * Members of the Product Advisory Committees (PACs) for agricultural commodities. **7. Implementation Aspects (Inferred):** * **Responsible Agency/Bodies:** The Securities and Exchange Board of India (SEBI) is the responsible agency. The Stock Exchanges are responsible for disseminating the circular's provisions to their members and on their websites. * **Timelines/Procedures:** The circular comes into effect immediately (as of June 12, 2025). Stock Exchanges are expected to promptly notify their members and update their websites. * **Amendment-Specific Implementation:** Stock exchanges must ensure that PACs dealing with agricultural commodities adhere to the revised meeting frequency requirement. **8. Expected Outcomes / Impact of Changes:** The likely intended outcome of this change is to: * Reduce the regulatory burden on PACs focused on agricultural commodities. * Provide greater flexibility in scheduling meetings based on the specific needs and activity levels of agricultural commodity markets. * Potentially improve the efficiency of PAC operations by allowing them to focus their resources on more relevant and timely issues. * Allow committee members to have a more manageable schedule while still fulfilling advisory duties. **9. Conclusion:** SEBI Circular SEBI/HO/MRD/MRDPoD-1/CIR/2025/087 introduces a significant amendment to the Master Circular for Commodity Derivatives Segment by adjusting the minimum meeting frequency requirement for Product Advisory Committees dealing with agricultural commodities. This change, likely prompted by market participant feedback, aims to streamline operations and provide greater flexibility within the regulatory framework, ultimately promoting a more efficient and responsive commodity derivatives market.

Key Entities Referenced