The Securities and Exchange Board of India approved the bourse’s launch of electricity derivatives earlier in June. When asked for comment, a representative for MCX pointed to a statement announcing the Sebi nod and didn’t elaborate on the details of the contracts.
MCX is seeking to capitalize on demand for instruments helping power producers, distributors and companies manage changes in electricity prices. In a sector typically characterized by long-term power agreements, hedging is becoming increasingly important as renewable energy — more volatile due to its intermittent nature — grows more widespread.
Power derivatives, traded globally on bourses including CME Group Inc. in the US and the European Energy Exchange AG, have seen a surge in trading. Last year, the market grew 63% for European contracts and 299% for Japanese ones, EEX reported.
India’s largest equity bourse, the National Stock Exchange of India Ltd., last week received the regulator’s approval to launch monthly electricity futures.
