Faced with legal difficulties in allowing options trading in commodities, the Securities and Exchange Board of India (Sebi) has decided to let in new institutional players in commodity futures to improve the depth of the market. Although the regulator had floatedadiscussion paper to allow options in commodities first and then let in more players, it seems to come up againstalegal snag. Sources close to the development said that “till the legal framework for allowing options is cleared, Sebi will allow new players. Indian and overseas private equity funds and venture funds registered with Sebi under category 3 alternative investment funds (AIF) will be permitted first as their regulation permit them to participate in listed and unlisted derivatives. Mutual funds, which are also regulated by Sebi, will be permitted after that. In the next phase, insurers and other financial institutions will come, and in the third leg banks will be permitted. These require the respective sectoral r