MCX Strengthens Commodities Portfolio with Launch of Electricity Futures

The Multi Commodity Exchange of India Ltd. (MCX), India's leading Commodity Derivatives Exchange and the largest Commodity Options Exchange globally (FIA, 2024), had received SEBIs approval for launch of electricity derivatives in June 2025, and is pleased to announce the launch of the Electricity Futures Contract, effective from Thursday, July 10, 2025, marking a significant milestone in the development of the country's energy derivatives market.

MCX believes this launch is timely, as the electricity sector is witnessing significant growth with a need to manage price stability, fluctuating demand, fuel costs, and market developments. The Electricity Futures contract will help power generators, distribution companies, large industrial consumers, and financial participants with a transparent, liquid, and reliable hedging mechanism. It will also promote investors with a widely used commodity to add to their portfolio.

The new Electricity Futures Contract aims to meet the growing demand for structured electricity price risk management instruments. The contract will be available for all 12 calendar months of the year, with trading initially open for the current and next three months. The trading unit is 50 MWh, quoted in Indian Rupees per MWh (excluding taxes and levies), with a tick size of ₹1 per MWh. The contract will be cash settled based on the Volume Weighted Average of the Unconstrained Market Clearing Price (UMCP) of the Day Ahead Market (DAM) at the Indian Energy Exchange (IEX) for all calendar days in the expiry month.

The contract will follow SEBI's Daily Price Limits (DPL) for market stability, with an initial slab of 6%, extendable up to 9% on a given day. The initial margin requirement is a minimum of 10% or volatility VaR based margins, whichever is higher. Client level position limits are capped at 3 lakh MWh or 5% of the market-wide open interest whichever is higher.

Speaking on the development, Ms. Praveena Rai, MD & CEO, MCX, said: "Electricity is a critical commodity with price volatility determined by a number of factors - driven by demand-supply, conditions like weather (seasonality), peak loads (industrial / commercial / residential / agricultural), festive seasons and so on. The launch of Electricity Futures reaffirms MCX's commitment to building innovative and forward-looking products that address real market needs. This contract is a step toward deepening India's energy markets and supporting the broader goal of sustainable, marketdriven power pricing- an essential pillar for realizing the vision of Viksit Bharat."

Shares of Multi Commodity Exchange of India Limited was last trading in BSE at Rs. 8745.25 as compared to the previous close of Rs. 8879.45. The total number of shares traded during the day was 12768 in over 3652 trades.

The stock hit an intraday high of Rs. 8917.45 and intraday low of 8730.60. The net turnover during the day was Rs. 112705258.00.

Source : Equity Bulls

Keywords

MultiCommodityExchangeofIndia INE745G01035 MCX Commodities ElectricityFutures