Commodity derivatives bourse Multi Commodity Exchange Ltd (MCX) has received markets regulator Securities and Exchange Board of India’s (SEBI) approval to launch India’s first gold options contract.
The gold futures contract will have bi-monthly duration. The option will also have the existing gold kilo futures contract as its underlier.
The launch of gold options is one of the major reforms SEBI has taken for the commodity derivatives market. Earlier in June 2017, SEBI had allowed options trading in commodities to deepen the market but permitted each exchange to launch options on futures of only one commodity initially.
SEBI is going to put strict eligibility criteria and options could be launched on futures contract of only those commodities that are among the top five in terms of total trading turnover value of previous 12 months. It also has stipulated necessary guidelines with regard to the product design and risk management framework to be adopted for trading in options on commodity futures.
About Multi Commodity Exchange Ltd (MCX)
The MCX is the country’s largest metals and energy commodity bourse. It is country’s first listed commodity futures exchange that facilitates online trading, and clearing and settlement of commodity futures transactions, thereby providing a platform for risk management.
It began functioning in November 2003 and operates within the regulatory framework of the Forward Contracts Regulation Act, 1952 (FCRA, 1952). It offers futures trading in bullion, ferrous and non-ferrous metals, energy, and a number of agricultural commodities (mentha oil, cardamom, potatoes, palm oil and others). Globally, MCX ranks no. 1 in silver, no. 2 in natural gas, no. 3 in crude oil and gold in futures trading.