Crude palm oil options get SEBI nod

Suresh P Iyengar Mumbai | Updated on November 16, 2021

MCX may launch trade by year-end

Market regulator Sebi has approved MCX application to launch options trading on crude palm oil futures. The exchange is expected launch the CPO options in December-end or early next year, sources said.

India is dependent on imports to meet domestic demand and the CPO options will help the supply chain including importers and domestic trade to hedge their open position on the exchange at a very competitive cost.

The futures trading in CPO on MCX has been gaining traction with the average daily turnover increasing 41 per cent in October to ₹376 crore against ₹266 crore in September.

Investors are fast shifting from commodity futures to options with trading in futures becoming a costly affair after levy of peak margin which calls for 100 per cent upfront margin. Peak margin on option is much lower as it is calculated on the premium, while in futures it is levied on value of the commodity.

The average daily turnover of futures increased 12 per cent in October to ₹29,067 crore against ₹25,875 crore logged in September, while that of options in the same period jumped nine per cent to ₹8,350 crore against ₹7,641 crore.

The frequent duty adjustments made by importing and exporting countries makes it difficult for importers to make a business plan and hedge their risk. India imports CPO from Indonesia, Malaysia and Thailand.

Published on November 16, 2021

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