Commodity exchanges seek clearances for agri-commodity options
Commodity bourses in India, Multi Commodity Exchange (MCX) and National
Commodity Exchange (NCDEX) are looking forward for more clarity on
options regulation from SEBI, before the budget announcement.
MCX, India’s largest commodities bourse by turnover intends to introduce option trading
this month. Such products are expected to boost revenues, after the
regulator, i.e. SEBI having permitted trading in derivatives in the
month of September.
However, the Commodities Derivatives and Advisory Committee (CDAC) is
yet to formally finalise the criteria for selecting commodities for
launching options.
The options contracts in commodity will be a major development for the
market as the option contracts are expected to facilitate hedging by
market participants and help deepen the commodity derivatives market.
Currently futures contracts are traded on commodity exchanges.
The exchanges have appealed for cash settlement on expiries, for the
options contracts on the relevant expiry dates. There are chances that
the option contracts may get devolved into futures contract as the
settlement nears.
SEBI has taken a cautious approach before conceding to the permission
requested by the commodity exchanges on the new option contracts for
agriculture commodities.
SEBI had in the previous year permitted trading in options contracts
with an aim of increasing liquidity, which can be expected to attract
more investors to the commodities market.
The previous year saw erstwhile commodities' market regulators, the
Forward Markets Commission (FMC) merging itself with SEBI.
With this new development, the commodities exchange now has to comply
with increased surveillance and stricter risk management in order to
avoid defaults in delivery.
Stock View:
Multi Commodity Exchange of India Ltd is currently trading at Rs
1252.85, down by Rs 19.15 or 1.51% from its previous closing of Rs 1272
on the BSE.
The scrip opened at Rs 1282 and has touched a high and low of Rs 1282
and Rs 1248.6 respectively. So far 219846(NSE+BSE) shares were traded on
the counter. The current market cap of the company is Rs 6487.2 crore.
The BSE group 'B' stock of face value Rs 10 has touched a 52 week high
of Rs 1420 on 03-Oct-2016 and a 52 week low of Rs 726 on 12-Feb-2016.
Last one week high and low of the scrip stood at Rs 1307 and Rs 1233.35
respectively.
The promoters holding in the company stood at 0 % while Institutions
and Non-Institutions held 59.06 % and 40.59 % respectively.
The stock is currently trading below its 50 DMA.
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