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MCX gets SEBI nod to launch electricity derivatives contracts

Author: PPD Team Date: 09/06/2025

The Multi Commodity Exchange of India Ltd. (MCX) has received approval from the Securities and Exchange Board of India (SEBI) to launch electricity derivatives contracts. This marks a major step in the evolution of energy trading in India.

The launch is supported by both SEBI and the Central Electricity Regulatory Commission (CERC), reflecting a strong push from regulators to deepen and modernise India’s power markets.

Electricity derivatives are financial contracts linked to electricity prices. They help generators, distribution companies, and large consumers hedge against price volatility. With rising renewable energy integration and market reforms, price fluctuations are becoming more frequent. Electricity derivatives offer a tool to manage that risk effectively.

The contracts will improve efficiency in the electricity market and support long-term planning by market participants. Ms. Praveena Rai, Managing Director and CEO of MCX, said the contracts will provide a transparent, regulated platform to manage power price risk and act as a bridge between the physical and financial markets.

MCX, operational since 2003, holds about 98% of the commodity futures trading volume in FY 2024–25. It offers contracts across energy, bullion, metals, agri commodities, and sectoral indices. The exchange has partnerships with several global and Indian trade bodies and exchanges.

With this approval, MCX becomes the first exchange in India to introduce electricity derivatives. The move supports India’s vision of ‘Viksit Bharat’ and reinforces the development of a mature, market-driven energy sector.

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