MCX gets Sebi approval to launch electricity derivatives
Mumbai: The Multi Commodity Exchange of India (MCX) has received approval from the Securities and Exchange Board of India (Sebi) to launch electricity derivatives, according to a regulatory filing on the BSE.
These contracts—linked to the price of electricity—will allow power generators, distribution companies, and large consumers to hedge against price volatility and manage risks more effectively. 'The electricity derivatives contracts will enhance efficiency in the power market,' MCX said in its filing.
The launch marks the resolution of a long-standing jurisdictional tussle over the regulation of electricity derivatives. The matter has been pending since the days of the now-defunct Forward Markets Commission (FMC), which was merged with Sebi in 2015.
Under current regulatory rules, if electricity derivatives are cash-settled, they fall solely under Sebi's purview. If the contracts are compulsorily deliverable, regulatory oversight will be shared between Sebi and the Central Electricity Regulatory Commission (CERC).
'These [electricity] contracts will offer participants a reliable, transparent, and regulated platform to manage power price risks, which are becoming more dynamic due to renewables and market-based reforms,' said Praveena Rai, managing director and chief executive of MCX.
Rai added that with India's growing focus on renewable energy and open access power markets, electricity derivatives could serve as a vital bridge between the physical and financial sectors.
MCX said the move positions it as a 'torchbearer of innovation' in commodity trading and supports India's ambitions for sustainable energy and deeper capital markets. The exchange also called the move a step towards strengthening India's energy market ecosystem.
Separately, the National Stock Exchange (NSE) disclosed in its May earnings call that it had received in-principle approval from Sebi to launch electricity derivatives as well.
MCX currently commands around 98% of the commodity futures trading market in terms of value for FY25.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Standard
2 hours ago
- Business Standard
MCX receives SEBI approval to launch electricity derivatives
The Multi Commodity Exchange of India (MCX) has received approval from the Securities and Exchange Board of India (SEBI) to launch Electricity Derivatives, marking a significant milestone in the evolution of India's Energy trading landscape. This development underscores the strong commitment and support of the Regulators - SEBI and Central Electricity Regulatory Commission (CERC) - in enabling a dynamic and sustainable power market. The Electricity Derivatives Contracts to be introduced by MCX will enable generators, distribution companies, and large consumers to hedge against price volatility and manage price risks more effectively, by enhancing efficiency in the power market. This landmark move positions MCX as a torchbearer of innovation in commodity trading, while reinforcing India's ambition towards sustainable energy and capital market development. It also marks a pivotal step toward deepening India's energy markets and aligns with the broader vision of 'Viksit Bharat'.
Time of India
3 hours ago
- Time of India
Explained: How is Specialised Investment Fund different from mutual funds, PMS, and AIF
Tired of too many ads? Remove Ads What is a Specialised Investment Fund (SIF)? Mutual Funds (MFs) Tired of too many ads? Remove Ads Portfolio Management Services (PMS) Alternative Investment Funds (AIFs) Structure and Regulation Tired of too many ads? Remove Ads Investment Flexibility and Strategy Liquidity and Tenure Who can set up a SIF? With a wide range of investment options today, it's crucial to understand the key differences between vehicles like Specialised Investment Funds (SIFs), Alternative Investment Funds (AIFs), Portfolio Management Services PMS ), and mutual funds—each tailored to distinct investor needs, risk appetites, and return market regulator Sebi has introduced a Specialised Investment Fund (SIF) framework to bridge the gap between mutual funds (MFs) and portfolio management services (PMS), and it aims to provide sophisticated investors with more flexible investment opportunities while ensuring regulatory funds pool money from multiple investors to invest in stocks, bonds, or other securities. They are highly regulated, offer diversification, and are accessible to a wide range of investors, making them one of the most popular investment vehicles. MFs are suitable for those looking for lower risk and ease of offers customised portfolio management to wealthy investors, with a minimum ticket size of Rs 50 lakh. It provides personalised attention, allowing investors to tailor their portfolio based on risk appetite and goals. While providing more control than mutual funds, PMS often carries higher fees and are investment funds pooled privately and involve investments in real estate, hedge funds, private equity, etc. They are open to sophisticated investors with a minimum entry limit of Rs 1 crore. AIFs come in three categories—high-risk, moderate-risk, and lower-risk funds—and are less regulated compared to mutual mutual funds that pool investor money into diversified portfolios, or PMS that provides tailored portfolio management, SIF is a newly introduced investment avenue by the regulator, offering a unique structure and strategy for sophisticated funds in India are regulated by SEBI and follow strict norms regarding transparency, liquidity, diversification, and suitability for retail investors. PMS offers customised portfolio management to wealthy investors where portfolios are managed on behalf of individual clients with a minimum investment threshold currently Rs 50 are pooled investment vehicles for sophisticated investors and are categorised into three types—high-risk, moderate-risk, and lower-risk funds. They are meant for high-net-worth individuals (HNIs) and institutional investors looking to participate in less-regulated, high-risk minimum amount to be invested in an SIF will be Rs 10 lakh per investor. The fund house can offer a SIP and SWP but it must comply with the minimum threshold funds follow standardised asset allocation models and are limited to listed instruments in most cases. PMS offers more customisation, with fund managers directly managing portfolios tailored to the client's profile. AIFs allow flexibility in investing in unlisted securities, structured debt, and real estate, depending on the regulator allows SIFs to offer 3 categories of investment strategies: they are equity-oriented strategies, debt-oriented strategies, and the third is a hybrid category. The current framework allows only one strategy per category per funds provide high liquidity with daily NAVs and redemption options. PMS products are also relatively liquid, though with more constraints compared to mutual funds. AIFs, depending on the strategy, may have multi-year lock-ins and limited exit SIF can be open-ended, closed-ended, or interval-based. The redemption process may include a notice period of up to 15 working days, allowing fund managers to manage liquidity are two routes to establish an SIF. As per the first rule, a fund house must be in operation for a minimum of 3 years with an AAUM of Rs 10,000 crore in the preceding 3 years. The fund house must also have an additional fund manager and must have at least 3 years of experience managing AUM of Rs 500 crore.: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
Business Standard
4 hours ago
- Business Standard
MCX gets SEBI nod to launch electricity derivatives
The Multi Commodity Exchange of India (MCX) has received approval from the Securities and Exchange Board of India (SEBI) to launch electricity derivatives. Backed by both SEBI and Central Electricity Regulatory Commission (CERC), this move aims to help power generators, distributors, and large consumers hedge price risks and manage volatility. It is a big push for efficiency in the power market and aligns with Indias goal of becoming a developed, energy-secure nation. Praveena Rai, MD & CEO, MCX, said: "The introduction of electricity derivatives marks a pivotal development in Indias commodities ecosystem. These contracts will offer participants a reliable, transparent, and regulated platform to manage power price risks, which are becoming more dynamic due to renewables and market-based reforms. With Indias growing focus on renewable energy and open access power markets, electricity derivatives can serve as a vital bridge between the physical and financial sectors." MCX is India's leading commodity derivatives exchange with a market share of about 98% in terms of the value of commodity futures contracts traded in financial year 2024-25. It offers trading in a diverse range of commodities, spanning multiple segments including bullion, energy, metals and agri commodities, as well as sectoral commodity indices. On a consolidated basis, MCX's net profit rose 54.16% to Rs 135.46 crore while net sales rose 60.83% to Rs 291.33 crore in Q4 March 2025 over Q4 March 2024.
