Tepid response to gold options launch on NSE, turnover a mere Rs 12 lakh

A senior NSE official says exchange has approached Sebi to allow liquidity enhancement scheme, or market making, to attract volumes

The gold options contract on the National Stock Exchange (NSE) attracted thin response on its launch day on Monday with a turnover of only Rs 12 lakh.

A senior NSE official said the exchange has approached the Securities and Exchange Board of India (Sebi) to allow the liquidity enhancement scheme (LES) to attract volumes in the “options” segment. 

The NSE also gives Indian gold price equivalent to the international price for gold option. This method, developed by Refinitive GFMS, Mumbai, gives “XAU” gold price in the rupee term, taking the live rupee vs dollar exchange rate.

The NSE is offering “options” trading in gold for June and July. Trading in gold “options” is available also on the Bombay Stock Exchange (BSE) and the Multi Commodity Exchange of India (MCX).  Apart from gold, the BSE offers “options” trading in silver.

The NSE plans to launch silver options soon.  The MCX offers “options” trading in gold, silver, and crude oil, among other globally referenceable commodities.

The BSE on Monday surpassed the MCX in terms of cumulative turnover generating from “options” contract. 

While total turnover on the MCX from “options” contract was reported at Rs 266 crore, that on BSE stood at Rs 404 crore on the morning trade on Monday.

However the MCX scores in open interest. 

Ajay Kedia, managing director, Kedia Commodity, said: “Commodity exchanges in the initial phase launched options contract with the LES, which attracts wider participation. To attract greater participation in this segment, more awareness is needed.”

A senior BSE official said, options are always preferred over futures in securities from a hedging point of view. Taxation is also attractive in options, compared to futures.