MCX jumps after Sebi approves options on commodity indices

Multi Commodity Exchange of India (MCX) rose 3.14% to Rs 1466.75 after the market regulator Sebi allowed exchanges having a commodity derivative segment to facilitate trading in options on commodity indices.

Exchanges will have to seek a prior approval from the market regulator for allowing the same, the Securities and Exchange Board of India (Sebi) said in a circular on Thursday.

The move is part of efforts to have more products in the commodity derivatives market.

Further, the regulator asked exchanges to submit data of at least three past years of the index constructed, monthly volatility, rollover yield for the month, and monthly return.

"On approval from the regulator, the Stock Exchange(s) shall also publish the above data on their website before launch of the contract," Sebi said.

Additionally, exchanges are also required to disclose open interest of top 10 largest participants or group of participants in 'option in indices' (both long and short) and details of their combined open interest in underlying constituents.

Sebi further stated that each option expiry should have minimum three strikes one each for In the Money (ITM), Out of the Money (OTM), and At the Money (ATM). The size of the contract should be at least Rs 5 lakh at the time of introduction in the market, the circular said.

Trading hours of the options on the commodity indices will be similar to trading hours of the constituent futures of underlying index, and the expiry date can be set by the exchanges, Sebi said.

MCX facilitates online trading of commodity derivatives transactions, thereby providing a platform for price discovery and risk management. Commodities traded on the exchange include bullion, energy, metals and agri commodities.

On a consolidated basis, MCX reported 52% fall in net profit to Rs 34.46 crore on 17.24% decline in total income to Rs 104.06 crore in Q3 FY22 over Q3 FY21. EBITDA in the third quarter was Rs 52.78 crore, down by 28% from Rs 73.45 crore in Q3 FY21.

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