MCX gets Sebi nod for launching options contract in gold

The Multi Commodity Exchange Ltd (MCX) on Wednesday said it has received markets regulator Securities and Exchange Board of India's (Sebi) approval to launch the country's first gold options contract soon.

"We have received the approval to launch options on futures in gold contract from Sebi. We have already commenced mock trading and conducting bullion participant awareness events. In the next couple of weeks, we will finalise exact contract specifications and launch date," MCX spokesperson Girish Dev said in Mumbai.

In June this year, Sebi allowed options trading in commodities to deepen the market but permitted each exchange to launch options on futures of only one commodity initially.

Putting in place strict eligibility criteria, Sebi said options could be launched on futures contract of only those commodities that are among the top five in terms of the total trading turnover value of previous 12 months.

Besides, the average daily turnover of underlying futures contracts of such a commodity in past one year should be at least Rs 200 crore for agricultural and agri-processed commodities, and Rs 1,000 crore for other commodities.

In line with the Sebi guidelines for launching options on futures of only one commodity initially, we chose gold contract options, Dev said.

Exchanges have been demanding for long that options trading in commodities be allowed. While Sebi had agreed to permit options trading last year itself, some legal requirements were holding back the move.

Sebi had also stipulated necessary guidelines with regard to the product design and risk management framework to be adopted for trading in options on commodity futures.