Latest news with #ElectricityFutures
Business Standard
08-07-2025
- Business
- Business Standard
MCX launches Electricity Futures Contract
With effect from 10 July 2025 Multi Commodity Exchange of India announced the launch of the Electricity Futures Contract, effective from Thursday, 10 July 2025, marking a significant milestone in the development of the country's energy derivatives market. MCX believes this launch is timely, as the electricity sector is witnessing significant growth with a need to manage price stability, fluctuating demand, fuel costs, and market developments. The Electricity Futures contract will help power generators, distribution companies, large industrial consumers, and financial participants with a transparent, liquid, and reliable hedging mechanism. It will also promote investors with a widely used commodity to add to their portfolio. The new Electricity Futures Contract aims to meet the growing demand for structured electricity price risk management instruments. The contract will be available for all 12 calendar months of the year, with trading initially open for the current and next three months. The trading unit is 50 MWh, quoted in Indian Rupees per MWh (excluding taxes and levies), with a tick size of ₹1 per MWh. The contract will be cash settled based on the Volume Weighted Average of the Unconstrained Market Clearing Price (UMCP) of the Day Ahead Market (DAM) at the Indian Energy Exchange (IEX) for all calendar days in the expiry month. The contract will follow SEBI's Daily Price Limits (DPL) for market stability, with an initial slab of 6%, extendable up to 9% on a given day. The initial margin requirement is a minimum of 10% or volatility VaR based margins, whichever is higher. Client level position limits are capped at 3 lakh MWh or 5% of the market-wide open interest whichever is higher.
Mint
28-06-2025
- Business
- Mint
NSE to introduce liquidity enhancement scheme for upcoming electricity futures
The National Stock Exchange on Friday in an attempt to increase participation in the upcoming electricity futures contracts announced a liquidity enhancement scheme for the segment. In a circular on June 27, the NSE announced that the enhancement scheme will be effective from July 11. 'NSE is now pleased to introduce LES in Electricity Futures (Monthly Base Load) with effect from July 11, 2025, to encourage active participation and market development,' it said. The exchange — the largest in terms of market share in both derivative and cash segments — in May had received a green signal from the regulators to launch electricity futures contracts. The NSE has been focussing more on the segment, given the demand of power derivatives in the global market. Electricity futures are a financial contract whereby participants can lock the prices of electricity on a particular day for a certain month in the future. People who can trade in this future can include trading member, corporate buyer, generator, trader, or financial institution approved by the SEBI. No actual power is delivered through electricity futures. In its Friday circular, the NSE said that trading members who are interested in providing continuous quotes as Market Makers (MM) are required to register with the exchange. 'The exchange will appoint two Market Makers (MM1 & MM2) for Electricity Futures contract based on a competitive bidding procedure. The successful bidder shall be appointed as MM for a period of 6 months from the date of launch of LES on Electricity Futures,' it said. The interested people must register with the exchange by July 2, it said. In terms of incentives, Market Maker 1 will be eligible for a monthly incentive of ₹ 85 lakh, and Market Maker 2 will get ₹ 45 lakh provided they meet all quoting conditions. NSE specifies four criteria to become a market maker to trade in electricity futures: 1. Net worth of ₹ 5 crore. 2. No serious disciplinary action against the member in the last year. 3. Member should have algo registration in commodity derivatives segment. 4. The member (or group entity) must demonstrate a reasonable understanding, experience in or ownership of assets, companies, customers, or plants in at least one segment of electricity sector value chain, including generation, transmission, distribution, power trading, equipment supply, or Engineering, Procurement and Construction (EPC).
