METLDEX, India's first base metal futures index from MCX, has now gone live. The index will track the real-time performance of a basket of MCX base metals futures and facilitate efficient price risk management across the value chain.
It is noteworthy that the domestic metal prices, until now, were pivoted to the London Metal Exchange (LME) prices but will end with the launch of METLDEX.
METLDEX is based on the five base metals - zinc (5 metric tonne), copper (2.5 mt), nickel (1.5 mt), lead (5 mt) and aluminium (5 mt).
"MCXMETLDEX futures offers retail investors an opportunity of investing in the industrial sector as a whole without the need to analyse each and every commodity separately. It is convenient as the contracts are settled in cash and also this will facilitate efficient price risk management across the value chain even to the smaller investor also due to low contact size and low margin," said Ajay Kedia, Director, Kedia Commodities.
The contract has a lot size equal to 50 times of underlying MCX iCOMDEX Base Metals Index. The tick size (minimum price movement) for the contract is Re 1. The contracts would finally be settled in cash at the end of expiry of each contract.
Speaking to CNBC-TV18, Rishi Nathany of MCX said that it is a very well balanced index with all the 5 base metals.
“It gives you a portfolio approach to all the base metals. Base metals are normally indicators of economic activity. So someone can take an exposure to this index based on their perception of the economic activities,” he said.
Three futures contracts of the metal index expiring in the months of November 2020, December 2020 and January 2021 are available for trading.
In August, the exchange had launched trading in bullion index futures on MCX iCOMDEX Bullion index or the MCXBULLDEX.
“After successful launch of bullion index futures, we are glad to introduce METLDEX futures that will further strengthen commodities as asset class in the country. Index trading will facilitate instant portfolio diversification and encourage passive, thematic elements in portfolios. The Index will soon emerge as a new real time barometer for Indian metal industry,” said PS Reddy, MD & CEO, MCX.
At 12:55 pm, MCX METLDEX traded 0.22 percent higher at 12,035.
First Published: IST