Market regulator the Securities and Exchange Board of India said on Tuesday that India needed to graduate from over-the-counter to exchange traded platform in derivatives trading to provide transparency, better execution and liquidity.

"We have to move progressively to the exchange-traded platform from OTC to provide transparency, better execution and liquidity," Sebi's Executive Director, Manas S Ray, told reporters in Mumbai.

"We have to progressively move to exchange-traded platform," he said.

Sebi would have a relook at the regulatory mechanism, he said.

"We have to realign regulation (in keeping with present requirements)," Ray said.

The country needs to introduce direct market access, currency derivatives and interest-rate futures, he said.

Referring to commodity prices which had shot up the world-over earlier this year, Ray blamed (overseas) index funds for investing in futures which led to a speculation in the spot market.

"Index funds had invested heavily in commodity futures leading to speculation in futures in the US and major economies," he said.

Financial markets are integrated but "we (Indian markets) are insulated to a large extent", he said.

The top five US banks have a base in India, but efforts have been taken to see that the crisis in the US does not spread here, he said.