The Securities and Exchange Board of India (Sebi) has proposed the removal of the 'close-to-the-money' (CTM) category in commodity options contracts. This decision is part of a broader initiative to simplify the trading process and reduce compliance burdens for exchanges. Currently, commodity options are classified into in-the-money (ITM), out-of-the-money (OTM), and CTM categories. The CTM category complicates option exercise procedures and creates uncertainty for option sellers, as it includes contracts where the strike price is very close to the current spot price of the underlying commodity. Sebi's proposal aims to align Indian regulations with global practices, as most leading commodity exchanges do not utilize the CTM framework. Additionally, Sebi is looking to consolidate derivatives regulations, streamline compliance, and enhance operational flexibility for exchanges. This includes allowing online disclosures, reducing the frequency of product advisory committee meetings for non-agricultural commodities, and providing exchanges with greater flexibility in managing position limits. Public comments on the draft paper are open until June 4.