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MCX launches India’s first commodity options in gold

MCX launches India’s first commodity options in gold

The Multi-Commodity Exchange of India Ltd (MCX) launched India’s first commodity options in gold, giving stakeholders a new set of financial instruments to hedge their price risks. It was launched by Union Finance Minister Arun Jaitley in New Delhi on October 17, 2017.

Key Features

  • Currently Gold Option contract has been launched keeping Gold (1 Kg) futures as the underlying asset, with expiry on November 28, 2017 and January 29, 2018.
  • The European-styled Gold options are hedge-friendly and physically settled, which means on exercise at expiration the options position develops into a corresponding underlying MCX 1 KG Gold futures position at the strike price of the exercised options.
  • The options product is unique and the first of its kind, giving buyers the right to buy or sell the underlying asset, but no obligation, at a specified price at the expiry.

The industry has waited for this new instrument since year 2003 when then NDA government opened up the Indian commodities market. The launch denotes one of the most significant reform measures since modern commodity derivatives trading started 14 years ago. There has been a very conscious effort by the government and SEBI to develop and integrate commodity markets in a phased manner. 

About MCX

Having commenced operations on November 10, 2003, Multi Commodity Exchange of India Limited (MCX) is India’s first listed, national-level, electronic, commodity futures exchange with permanent recognition from the Government of India. Various commodities across segments are traded on the Exchange platform. These include bullion, energy, metals and agri commodities. The exchange has forged strategic alliances with various international exchanges, as well as Indian and international trade associations.

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