India INX to begin trading in gold options by month end

New Delhi-India (Aug 12) The Bombay Stock Exchange (BSE)-promoted India International Exchange (India INX) will launch trading in gold options from 30 August, a move which will allow investors an opportunity to hedge their risk without worrying about daily market volatility.

India INX, which has received regulator Securities and Exchange Board of India’s nod to launch the product, has estimated that gold options, along with other gold contracts, would clock a daily average turnover of $35 million on the exchange’s platform.

Recently, domestic commodity exchange MCX also said it has received Sebi’s approval to commence trading in gold options contracts. The bourse is likely to launch the product by August-end. “Gold options will give participants an opportunity to hedge their risk without worrying about daily volatility,” India INX managing director and chief executive officer (CEO) V. Balasubramaniam said in a statement in Mumbai.

“This instrument will give buyer a right to buy or sell an underlier at a preset price on a future date,” he added. In June, Sebi had allowed options trading in commodities to deepen the market but permitted each exchange to launch options on futures of only one commodity initially.

Trading in options has been a long pending demand of the exchanges and market intermediaries. While the market watchdog had agreed to permit options trading last year itself, some legal requirements were holding back the move. Sebi had stipulated necessary guidelines with regard to the product design and risk management framework to be adopted for trading in options on commodity futures.

India INX began its operations on 16 January 2017 and is India’s first International Exchange set up at GIFT City in Gandhinagar. The exchange, which operates for 22 hours a day, allows international investors and Non-Residents Indians to trade in various asset classes including equities and derivatives from anywhere across the globe.

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