MUMBAI: Stock exchanges running a commodity segment will be able to launch options on commodity indices. Capital markets regulator Sebi facilitated the launch of index options for the likes of MCX, NCDEX, NSE and BSE all of which run commodity segments.
The popular indices currently are MCX’s BullDex, MetlDex, EnrgDex and NCDEX’s NKrishi. Exchanges offer futures on the indices. Options will offer participants a cheaper product with margin to trade being 1-2% of the price against 7-8% on index futures, said an exchange official.
“In an endeavour to have more products in the Commodity Derivatives Market and based on the recommendation of Commodity Derivatives Advisory Committee (CDAC) and proposal from Stock Exchanges, it has now been decided to permit recognised Stock Exchanges having a Commodity Derivative segment, to introduce options on commodity indices,” said a Sebi circular.
“One more product will be available to participants and that would deepen the market,” said an MCX official. “The framework means exchanges can design and develop the new product and seek Sebi approval for launching the same,” said Rajesh Palviya, derivatives head at Axis Securities.
The Stock Exchanges with Commodity Derivatives segment are directed to take steps to make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the same.