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MCX iCOMDEX: A landmark commodity index series

MCX iCOMDEX: A landmark commodity index series

MCX iCOMDEX: A landmark commodity index series
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By CNBCTV18.COMJan 10, 2020 3:30:32 PM IST (Published)

On 20 December 2019, MCX launched a new series of indices under the name MCX India Commodity Indices, or MCX iCOMDEXTM. These indices are based on commodity futures contracts traded on MCX and conform to the SEBI-prescribed guidelines for the design of commodity indices. Besides, MCX has ensured that the indices adhere to financial benchmarks set by the International Organization of Securities Commissions (IOSCO) in construction, administration and governance.

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MCX iCOMDEX are excess return indices which consist of a Composite Index (MCX iCOMDEX Composite Index, consisting of eleven liquid futures contracts across different segments traded on MCX), two sectoral indices (MCX iCOMDEX Bullion Index and MCX iCOMDEX Base Metals Index) and four single-commodity indices (MCX iCOMDEX Gold Index, MCX iCOMDEX Silver Index, MCX iCOMDEX Copper Index and MCX iCOMDEX Crude Oil Index). These indices have a base value of 10,000 as on December 31, 2015 and the historical index values since then are available on the MCX website.
Excess Return indices, like MCX iCOMDEX, provide a ‘roll return’ (generated as the underlying constituents are ‘rolled over’ on their expiry) over and apart from price returns. As such, they reflect the actual returns generated from holding a portfolio of futures, rather than physical commodities. Being an Excess Returns-based tradable index series, MCX iCOMDEX joins the ranks of global benchmark indices, such as S&P GSCI and Bloomberg Commodity Index.
Subject to approval by the SEBI, MCX may launch derivative contracts on the MCX iCOMDEX series in the future, which would provide investors the opportunity to invest on the basis of their directional views on the commodity sector. This would complement the investment opportunities available in derivative contracts on individual commodities.
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