MCX unveils options trading in gold

new delhi — India’ss largest commodity exchange MCX on Tuesday launched options trading in gold with Finance Minister Arun Jaitley describing it as one of the steps towards formalising gold trade in the country.

“This marks a very important evolution in trading of the yellow metal itself. It hedges all risks by giving traders the option of futures,” Jaitley said after launching the options trade at a ceremony here. To start with, the options trading will be available on a 1kg gold futures contract. The contracts will expire in November and in January 2018. “Indians are great buyers of gold. This new product will be extremely successful,” he said.

The festival of Dhanteras is being celebrated on Tuesday, which people observe by purchase or gift of precious metals like gold and silver. “I am sure the more it formalises, better it is for consumers, jewellers and those trading in this. That’s in consonance with the business environment for future that we see for us,” Jaitley said. Commodities and capital markets regulator Securities and Exchange Board of India (Sebi), allowed MCX in August to launch options trading in gold. MCX currently offers futures trade in gold and other commodities.

Depending on the success of the gold options, MCX said it will seek the regulator’s permission for options trade in other commodities like cotton, crude palm oil, silver and copper. “After 3-6 months, we will decide after looking at the success of the gold options,” MCX chief executive Mrugank Paranjape told reporters.