Derivatives

All about iCOMDEX Energy futures

Bavadharini KS BL Research Bureau | Updated on August 28, 2021

Recently commodity exchange MCX received permission from market regulator SEBI to unveil futures contracts on MCX iCOMDEX Energy Index (launched in October 2020). The futures contract tracks the index, which consists of crude oil (75 per cent weight) and natural gas (25 per cent weight) futures contracts as the underlying.

The value of the index fluctuates based on these underlying commodities. It is an alternative avenue for investors who are looking to manage their investments in energy sector. The risk of delivery associated with commodities is zero as these contracts are cash-settled.

Specifications

MCX’s Energy Index will be traded Monday through Friday between 9 am and 11:30/11:55 pm. The date of launch of the index futures are yet to be announced by MCX.

Like any other futures contracts, the Energy Index contracts too come with an initial margin of 10 per cent. The exchange also collects an extreme loss margin of 1 per cent in case of high volatility. The daily price limit will be +/- 4 per cent. If there is a breach in this base limit, relaxation will be allowed up to +/- 6 per cent without a cooling off period. If there is a further breach, this limit shall be further relaxed to up to 9 per cent, after a cooling off period of 15 minutes. If there is a breach beyond this, the price limit may be further relaxed.

Do keep in mind that the exchange levies additional or special margin on all outstanding positions (on buy/sell side) at a percentage as deemed fit.

Send your queries to derivatives@thehindu.co.in

Published on August 28, 2021

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