MCX Electricity Derivatives: The Securities and Exchange Board of India (Sebi) has given the green signal to the Multi Commodity Exchange (MCX) of India to launch electricity derivatives.
Energy derivatives refer to a type of financial contract in which the underlying commodity is an energy product, such as electricity, coal or oil. Notably, electricity derivatives trade on the future output of electricity. This trading activity takes place on a commodity exchange along with trading activity in other commodities, such as bullion, metals, agricultural commodities and sectoral commodity indices.
At present, contracts of metals, such as zinc, aluminium, copper and lead, and bullion metals like gold and silver, and trade in oil and natural gas can be undertaken on the MCX.
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MCX announced in a press release that the development is a ‘significant milestone’ in India’s energy trading landscape.
“This development underscores the strong commitment and support of the Regulators - Sebi and the Central Electricity Regulatory Commission (CERC) - in enabling a dynamic and sustainable power market,” MCX said in a release.
“This landmark move positions MCX as a torchbearer of innovation in commodity trading, while reinforcing India’s ambition towards sustainable energy and capital market development. It also marks a pivotal step toward deepening India’s energy markets and aligns with the broader vision of 'Viksit Bharat’,” it added.
Praveena Rai, managing director and CEO, MCX said that the introduction of electricity derivatives is a significant development in India’s commodities ecosystem.
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“The introduction of electricity derivatives marks a pivotal development in India’s commodities ecosystem. These contracts will offer participants a reliable, transparent, and regulated platform to manage power price risks, which are becoming more dynamic due to renewables and market-based reforms. With India’s growing focus on renewable energy and open access power markets, electricity derivatives can serve as a vital bridge between the physical and financial sectors,” Rai said in the release.
The development is likely to impact MCX share price when trading activity resumes on June 9, 2025. Shares of MCX closed higher by 4.45 per cent at Rs 7,415 apiece on the NSE on June 6.
