The Multi Commodity Exchange of India Ltd. (MCX), India’s leading commodity derivatives exchange and the world’s largest commodity options exchange by volume (FIA, 2024), has announced the official launch of its much-anticipated Electricity Futures Contract, effective Thursday, July 10, 2025. The launch comes on the heels of SEBI’s approval in June 2025 and marks a pivotal step in the evolution of India’s energy risk management ecosystem.

The Electricity Futures Contract is designed to offer power producers, distribution companies, large-scale industrial consumers, and financial institutions a transparent and reliable tool for hedging electricity price risk. With increasing volatility in power demand, fuel costs, and grid loads, MCX sees this launch as critical for enabling price discovery, liquidity, and stability in the electricity segment.

The contract will be available for all 12 calendar months, with initial trading open for the current and next three months. Each contract will represent 50 MWh, quoted in Indian Rupees per MWh, and cash settled based on the Volume Weighted Average Unconstrained Market Clearing Price (UMCP) of the Day Ahead Market (DAM) on the Indian Energy Exchange (IEX).

Key features include a tick size of ₹1 per MWh, SEBI’s Daily Price Limits (DPL) ranging from 6% to 9%, and initial margin requirements of 10% or volatility-based VaR, whichever is higher. Client-level position limits are capped at 3 lakh MWh or 5% of the market-wide open interest, providing ample flexibility for participants while ensuring market stability.

Ms. Praveena Rai, MD & CEO of MCX, commented:

“Electricity is a critical commodity with price volatility driven by demand-supply dynamics, weather, seasonal usage patterns, and sectoral consumption. With this launch, we reaffirm MCX’s commitment to bringing real-world, forward-looking solutions to India’s energy markets. Electricity Futures will deepen India’s commodity market and help power India’s energy transition through better price signaling and hedging tools.”

MCX believes the contract will not only benefit institutional and commercial power stakeholders but also offer investors a new commodity class to diversify their portfolios. The move is expected to enhance India’s market infrastructure for electricity, and align pricing mechanisms with the long-term vision of Viksit Bharat, the government’s roadmap for a developed and energy-secure India.

💬 What do you think?

• Will electricity become a major traded commodity like gold or crude in India?
• Can these futures help stabilize energy prices in high-demand seasons?

💬 Drop your insights in the comments.
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