MCX to launch 10-gm gold futures contract soon, after testing tech platform
Summary
Mumbai: The Multi Commodity Exchange of India (MCX) plans to launch a 10-gram gold futures contract – considered the benchmark for investors and traders – after testing its new integrated commodity market platform.
The gold denomination contract launch will be announced "very soon," along with other new products, a senior official of the exchange said.
"We are looking forward to launch some of our approved contracts, i.e. gold 10 gm contract, which will be a monthly cycle, and two agri contracts – crude sunflower oil and cottonseed wash oil," Manoj Jain, chief operating officer of the MCX, said on an analyst call after its quarterly results on Monday.
Jain attributed the delay in the launch of the 10-gm gold futures contract, despite getting approval from the Securities and Exchange Board of India (Sebi) months ago, to the testing of its new technology platform system developed by software giant Tata Consultancy Services.
"System testing was the reason we were slightly delayed. We are hopeful you will get to know of the launch very soon," he added.
Gold traders and individual investors consider the 10-gm price the standard for the yellow metal and expect the contract to be more popular among retail traders than the existing guinea futures contract (8 gm) and the petal contract (1 gm).
"Individual investors and small jewellers aren't kicked about either guinea or the petal contracts, but they could take to the proposed 10 gm in a more meaningful way as it's the standard price quote," said Amit Modak, CEO of PNG Gadgil & Sons, which hedges its gold price risk on the exchange.
Small jewellers typically trade gold of 100-150 gm daily. Individual investors can punt or take delivery of the 10-gm contract through brokers who offer stocks and commodities under a single roof.
Standard measure
"This will be more popular among smaller traders and individuals than the other two small-sized contracts," said Kumar Jain, owner of UT Zaveri, a retail jeweller in Mumbai's Zaveri Bazaar gold market. Jain explained that everybody considers 10 gm to be the measure for gold prices rather than the 1 gm or 8 gm.
MCX runs the country's largest commodity derivatives segment with an almost 98% market share in commodity futures in the June quarter. It was trailed by NCDEX, a National Stock Exchange-led agri-derivatives exchange.
The exchange posted a 26% sequential jump in operating profit to ₹151.38 crore in Q1 and a similar rise in profit after tax to ₹110.92 crore. A year earlier, the MCX was saddled with heavy software costs after severing ties with technology vendor 63 moons. The contract with 63 moons ended in 2022 and the MCX migrated to the tech platform developed by TCS in October last year.
The exchange plans to launch electricity futures after a joint committee set up by Sebi and the Central Electricity Regulatory Commission arrive at an agreement on the proposal. The futures will be based on spot electricity contracts regulated by CERC.
Source: https://www.livemint.com