New Delhi, June 30 -- A regulatory panel constituted by the Securities and Exchange Board of India (Sebi) is discussing a proposal to allow foreign portfolio investors (FPIs) to trade physically settled non-agricultural commodity derivatives by giving clearing members the authority to close positions before contracts enter the delivery period, according to three people aware of the development.

The proposal, under discussion at the Commodity Derivatives Advisory Committee, seeks to address a long-standing tax hurdle that has kept FPIs out of bullion and base metal derivatives, where contracts are compulsorily deliverable on expiry.

"The CDAC has discussed a proposal to allow FPIs to hold their positions for up to two days before the ten...