MCX to kickstart weekly contract in gold soon

MUMBAI: The Multi Commodity Exchange (MCX) will launch a streamlined product for those interested in physical trading in gold. Sources indicated that this would be on the similar lines of the i-gold contract that MCX launched along with the World Gold Council last year, that is settled every week. Except, the new contracts could possibly be settled everyday. The product is expected to be launched within the next month or two.

Jignesh Shah, MD, MCX, said: “We decided to launch the weekly contract with smaller lots to cater to jewellers and traders who have smaller demand so that they can hedge their risks. We are going to further rejuvenate the i-gold product.” He added that the proposal had already gone to the regulator, Forward Markets Commission (FMC) for clearance. Currently, i-gold is available in 100 gm and 1 kg lots.

The new contract has not been fully decided upon, but sources indicated that over and above gold bars, coins could be traded. However, Mr Shah declined to comment.

A team is already in place to design the contract, sources said. While the details of the project have not yet been fleshed out, it is understood that the initiative could work like the cash trading on the equity markets with an order matching mechanism, which matches buy and sell orders automatically.

The futures exchanges are already keen to integrate spot and futures trading to reduce the price disparities. On this front, MCX along with Nafed launched the National Spot Exchange for agricultural produce last year, with an investment of Rs 50 crore. MCX is currently the world’s third largest gold trading platform, and 85% of its trading volumes come from bullion.