MCX looks to launch options trading in Jan-Mar quarter

New Delhi: Leading commodity exchange MCX plans to launch options trading in the next quarter of this fiscal in a few commodities like bullion and crude oil following Sebi's decision to allow such trading on bourses.

Market regulator Sebi on September 28 had allowed options trading on commodity exchanges with an aim to deepen the commodity derivatives markets and enhance liquidity.

This has been a long pending demand from the exchanges, investors and market participants. So far, only futures trading was permitted on commodity bourses.

"We expect to launch options trading during the January-March quarter of this fiscal. We think there is enough potential in six commodities -- crude oil, copper, gold, silver and two agri items," MCX MD and CEO Mrugank M Paranjape told PTI when asked about the company's plan after Sebi nod.

He said the exchange is waiting for Sebi guidelines on options trading before making a formal application to launch options trading in some of the commodities.

"Introduction of options would deepen and transform the Indian commodity derivatives markets, both in terms of products and participants. It will also complement the existing futures contracts and would make Indian commodity derivatives more vibrant and efficient," Paranjape said.

Sebi had said commodity exchanges willing to start trading in options contracts would have to take prior approval of the regulator for which detailed guidelines will be issued in due course.

A Sebi official had said the regulator had not yet decided on the number of commodities to be allowed for options trade and a decision in this regard would be taken soon.

However, the sources had revealed that the regulator plans to allow options trade in one commodity each in agri and non-agri basket initially. It is looking at commodities such as gold, copper, castorseed and soyoil.

The turnover of commodity exchanges stood at Rs 67 lakh crore in 2015-16, up 9 percent from the preceding fiscal. Out of the total turnover, MCX contributed Rs 56 lakh crore.

MCX's average daily turnover stood at Rs 24,591 crore during the first quarter of this fiscal. During the last fiscal, the average turnover was Rs 21,922.93 crore.

MCX has recently signed an agreement with Indira Gandhi Institute of Development Research (IGIDR) to support and undertake research on contemporary issues of relevance in the commodity derivatives market.