Options in gold make a debut

Finance minister Arun Jaitley on Tuesday launched gold options trading on the leading commodity bourse MCX and said this was one of the steps towards formalising gold trade.

By Our Bureau
  • Published 18.10.17
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Starting point: Arun Jaitley at the launch of the gold options trading in New Delhi on Tuesday. (PTI)

New Delhi: Finance minister Arun Jaitley on Tuesday launched gold options trading on the leading commodity bourse MCX and said this was one of the steps towards formalising gold trade.

After the success of the gold options, MCX said it will approach the regulator Sebi seeking permission for other commodities such as cotton, crude palm oil and silver.

At present, MCX offers futures trade in gold and other commodities even as the industry has been demanding other products such as options trade for hedging.

"This marks a very important evolution in trading of the yellow metal itself. It hedges all risks by giving them (traders) the option of futures," Jaitley said after unveiling the options trade on the auspicious day of Dhanteras.

Emphasising that the government is taking efforts to formalise the gold trade, Jaitley said, "I am sure more it formalises, better it is for consumers, jewellers and those trading in this. That's in consonance with the business environment for future".

This is the first product for options trading that regulator Sebi has allowed after 14 years of the commencement of commodity exchanges in the country, he added.

According to MCX, gold options contracts are available for trading from Tuesday and investors can trade in one kg gold. The contracts will expire in November and January.

Asked about measures taken to promote the new product, MCX managing director and CEO Mrugank Paranjape said, "Fundamentally, it is an extremely low-cost product. However as an introductory measure, we are not charging any transaction fee on this product till December."

RBI order

The RBI today asked banks to "immediately" pay interest due on the gold deposited by individuals and institution under the Gold Monetisation Scheme (GMS) launched in 2015. The government had launched the scheme to curb imports of gold.