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NSE gets SEBI nod to launch monthly electricity futures, aims to deepen power market reforms
By News Desk Published on June 11, 2025, 19:21 IST
The National Stock Exchange of India (NSE) has received regulatory approval from the Securities and Exchange Board of India (SEBI) to launch monthly electricity futures contracts, marking a significant milestone in India's efforts to deepen its power markets and drive long-term structural reforms under the Electricity Act, 2003.
The new futures contracts will provide market participants with tools to hedge against electricity price volatility, offer more accurate price signals, and encourage capital investment across the electricity value chain, including generation, transmission, distribution, and retail.
According to Niti Aayog, India's transition to net-zero emissions by 2070 will require over $250 billion in annual investment until 2047, with more than 50% of installed power capacity expected to come from solar and wind by 2030. A liquid electricity derivatives market is seen as critical for attracting large-scale domestic and international climate finance.
NSE MD & CEO Ashishkumar Chauhan stated that the approval is 'only the beginning' of the exchange's broader electricity derivatives strategy. Future offerings could include contracts for difference (CFDs) and longer-duration contracts like quarterly and annual futures, subject to regulatory clearances.
The contracts will be financially settled and cleared by NSE Clearing Limited, a SEBI-recognized Qualified Central Counterparty (QCCP) with a robust settlement mechanism and strong capital base.
NSE was the first Indian exchange to enter the electricity space, having established Power Exchange India Limited (PXIL) in 2008. With its combined expertise in spot and derivatives markets, NSE aims to build a comprehensive and liquid electricity derivatives ecosystem, aligned with key policy initiatives like Market-Based Economic Dispatch (MBED) and market coupling by CERC.
This development strengthens NSE's position as a global leader in derivatives, having been ranked the world's largest derivatives exchange by trading volume in 2024 by the Futures Industry Association (FIA).
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