Make Kitco Your Homepage

India's MCX to launch gold options in Sept

Kitco News

By Rajendra Jadhav

PANAJI, India, Aug 12 (Reuters) - India's Multi Commodity Exchange (MCX) will launch the country's first gold options contract in September allowing even smaller players in the bullion industry an instrument to hedge their risk, a senior company official told Reuters.

"Somewhere around end September we will launch gold options. We have already conducted mock drills," Murgank Paranjape, managing director of MCX , said on the sidelines of a conference.

The Securities and Exchange Board of India has approved the options contract, he said.

"For years the market has been waiting for options. This will give many small jewellers an opportunity to hedge their risk without worrying about daily volatility," said Prithviraj Kothari, managing director of RiddiSiddhi Bullions Ltd.

India is the world's second-biggest buyer of gold, typically importing around 800 tonnes a year, with the metal being used in everything from investment to religious donations and wedding gifts.

In June, India's markets regulator allowed hedge funds registered as category III Alternative Investment Funds (AIFs) to invest in commodity derivatives as clients, opening up the market to institutional investors for the first time. Harmony Hedge Fund has started trading on the MCX platform and another 35 hedge funds have approached the exchange for admission, Paranjape said.

Gold options and entry of hedge funds will increase the exchange's turnover in the next fiscal year, Paranjape said.

MCX's total income fell 7.1 percent from a year ago to 872.4 million rupees in the June quarter. (Reporting by Rajendra Jadhav; Editing by Eric Meijer)

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

Precious Metal Charts

Follow Kitco News