MCX plans to launch shorter contracts

livemint.com:

MUMBAI : MCX is planning to offer shorter duration futures contracts on select commodities and options on commodity indices, two people aware of the matter said, in a move that could significantly increase its turnover. This follows the market regulator allowing the commodities exchange go live on Tata Consultancy Services Ltd’s new commodity derivatives platform from 16 October. MCX is one of four Sebi-recognized national exchanges that runs the largest commodity derivatives segment (CDS), accounting for around 98% market share.

Other exchanges offering a CDS include NSE-anchored NCDEX, NSE and BSE. “With Sebi approval for the go-live date in, the exchange can now launch index options and shorter duration contracts on benchmark gold and silver contracts. This could have a positive impact on the exchange turnover as and when the plans are implemented," a person aware of the matter said.

Currently, MCX offers bi-monthly futures contracts on 1 kg gold and 30 kg silver. It offers gold and silver contracts in smaller denominations as well, but the bigger ones attract the largest volumes. A second person said that though MCX had sought and received Sebi approval for the shorter duration contracts, the bourse would once again approach the market regulator for the same.

The approval for index options will be sought after the shorter duration futures contracts. “Once trading on the new platform stabilizes, the exchange will look at launching shorter duration futures contracts on the benchmark gold and silver contracts to begin with, and then consider options on indices like Bulldex and Metldex," he added. Bulldex is the bullion index and Metldex is the base metals index.