MCX explores legal options against Asia Index

A sectoral official says the issue might be resolved, as the indices are yet to commercially used

Multi Commodity Exchange (MCX), the country's largest commodity derivatives bourse, is exploring legal options against the S&P and BSE indices company for proposing to use futures prices of gold traded on the MCX in their two new indices announced last week.

Asia Index Pvt Ltd, a joint venture between S&P Dow Jones Indices and BSE, announced the launch of the S&P BSE Sensex Gold Hedged Index and S&P BSE Sensex Dynamic Gold Hedged Index.

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These indices can serve as the basis of investment products such as exchange traded funds that allow investors to benefit from the returns of the Indian equity market while hedging against a decline in the value of the rupee versus gold. The S&P BSE Sensex Gold Hedge is calculated as a combination of a long S&P BSE Sensex total return position and Gold Mini futures contracts on the MCX. Sources said for using MCX futures prices, permission from the bourse is required. MCX declined to comment. A sectoral official said the issue might be resolved, as the indices are yet to commercially used. An e-mail sent to the S&P Asia Index company remained unanswered.