MCX Launches Electricity Futures, Strengthens Its Energy & Commodities Portfolio

Mumbai: The Multi Commodity Exchange of India (MCX), India’s largest commodity derivatives exchange, is set to launch Electricity Futures Contracts from July 10, 2025. This major step comes after receiving approval from the Securities and Exchange Board of India (SEBI) in June 2025. The new contract is a timely addition, considering the rapid growth and increasing complexity of India’s power sector.

Electricity prices in India are highly sensitive to demand-supply gaps, fuel costs, weather conditions, and usage patterns across residential, industrial, and agricultural sectors. The Electricity Futures Contracts will help companies such as power generators, distribution firms, large industrial consumers, and investors to hedge against price fluctuations in a reliable and regulated environment.

The contract is designed to offer transparent and structured price risk management. It will be available for all 12 months of the year, though trading will initially open for the current and next three months. Each contract will be for 50 megawatt-hours (MWh), and prices will be quoted in Indian Rupees per MWh, excluding taxes and levies. Settlement will be done in cash, based on the Volume Weighted Average Price (VWAP) of the Day Ahead Market (DAM) traded at the Indian Energy Exchange (IEX) during the contract expiry month.

For market stability, SEBI’s Daily Price Limits (DPL) will apply—starting at 6 percent and extendable up to 9 percent. The minimum margin requirement is 10 percent or volatility-based VaR margin, whichever is higher. Client-level position limits are capped at 3 lakh MWh or 5 percent of total open interest, whichever is greater.

MCX MD and CEO, Ms. Praveena Rai, stated that electricity is a critical commodity whose prices are influenced by seasonal and regional demands. She emphasized that the launch of Electricity Futures marks a significant step toward developing India’s energy markets and supporting sustainable, market-based electricity pricing. MCX, operational since 2003, holds a 98 percent share in commodity futures trading in India and offers a wide range of products across bullion, metals, energy, and agri-commodities.

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