Gold options will help expand the market further: MCX’s Paranjape

V Sajeev Kumar Thrissur | Updated on January 08, 2018

Mrugank M Paranjape, MD and CEO, MCX, lights the lamp at the Bullion Conclave, as Raghavan Srinivasan, Editor, BusinessLine , applauds. The conclave was organised by MCX, in association with BusinessLine , in Thrissur KK Majeed   -  KK Majeed

Commodity bourse CEO says India will now have a true price-hedging mechanism

MCX, one of the top 10 commodity exchanges in the world, is set to launch gold options in the next two weeks.

Addressing the Bullion Conclave organised by MCX, in association with BusinessLine, in Thrissur, the hub of Kerala’s gold business, Mrugank M Paranjape, MD and CEO, MCX, said: “We will be announcing the launch next week. We believe the introduction of gold options will open up the market and India will get a true price-hedging mechanism.”

The option contract will be anchored on a 1 kg future contract and the premium will be approximately ₹30,000 at current prices, which is the domestic price benchmark, said Paranjape.

Policy-makers now recognise gold as an asset class, both for consumption and investment, and are working on policies to strengthen the spot and derivatives market, the MCX CEO added.

“For any market to be successful, it needs widespread acceptance across the value chain. The biggest component of the value chain for gold is jewellers. Kerala will be the most important centre as the State has a large number of jewellers — both big and small — and of course, the highest per capita consumption in India,” said Paranjape.

Contract options allow participants to not only hedge prices, but also to avail of the benefits of upward price movements, he added.

MCX, with an average business turnover of ₹22,500 crore, expects the launch of gold options to increase its business by 20-30 per cent, he said.

‘Promising policies’

Kuriakose Conil, Vice-President (Retail Business), Federal Bank, said certain policy announcements by the government, such as the ban on import of gold coins, allowing 100 per cent FDI in the sector, gold monetisation schemes, etc look promising for the industry, both in the long and short term.

The retail jewellery segment is expected to see double-digit revenue growth in FY18 on the back of regulatory headwinds fading out, continued favourable demographics and improved consumer sentiment.

Earlier, in his welcome address, Raghavan Srinivasan, Editor, BusinessLine, pointed out that India is the world’s largest, most sophisticated and evolving market for gold. Hence, it is important to have formal trading in gold so as to explore its full potential. This would help expand business while dampening volatility in the gold market, he added.

Published on October 08, 2017

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