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India’s MCX to launch gold options in September

August 13, 2017

PANAJI: India’s Multi Commodity Exchange (MCX) will launch the country’s first gold options contract in September allowing even smaller players in the bullion industry an instrument to hedge their risk, a senior company official told Reuters.

“Somewhere around end September we will launch gold options. We have already conducted mock drills,” Murgank Paranjape, managing director of MCX, said on the sidelines of a conference.

The Securities and Exchange Board of India has approved the options contract, he said.

“For years the market has been waiting for options. This will give many small jewellers an opportunity to hedge their risk without worrying about daily volatility,” said Prithviraj Kothari, managing director of RiddiSiddhi Bullions Ltd.

India is the world’s second-biggest buyer of gold, typically importing around 800 tonnes a year, with the metal being used in everything from investment to religious donations and wedding gifts.

In June, India’s markets regulator allowed hedge funds registered as category III Alternative Investment Funds (AIFs) to invest in commodity derivatives as clients, opening up the market to institutional investors for the first time.

Harmony Hedge Fund has started trading on the MCX platform and another 35 hedge funds have approached the exchange for admission, Paranjape said.

Gold options and entry of hedge funds will increase the exchange’s turnover in the next fiscal year, Paranjape said.

MCX’s total income fell 7.1 per cent from a year ago to 872.4 million rupees in the June quarter.

Published in Dawn, August 13th, 2017