NSE, CME Group tie up to launch Nymex crude, natural gas derivatives

Indian bourse will be able to list and settle rupee-denominated contracts in these commodities

In a move to expand its commodity segment offerings, the National Stock Exchange (NSE) on Wednesday announced a data licensing agreement with the world’s leading derivatives marketplace CME Group for NYMEX WTI Crude Oil and Natural Gas (Henry Hub) derivatives contracts.

The agreement will allow NSE to list, trade and settle rupee-denominated derivative contracts in these global benchmarks for Indian market participants. The new launch will add to the energy basket offerings of NSE.

The exchange has applied to the market regulator Securities and Exchange Board of India (Sebi) for approval to launch these additional futures contracts.

"On receiving approval from Sebi, NSE would make available trading in futures of these two global benchmarks, which will be settled in INR on the NSE platform,” said Sriram Krishnan, who has just taken over as the chief business development officer at NSE. Earlier, Krishnan was the Managing Director & Co-Head, Global Transaction Banking, at Deutsche Bank India.

He said the agreement will help market participants meet their price risk management activities and trading objectives.

With this launch, NSE will also emerge as a competitor to Multi-Commodity Exchange of India (MCX), the only one offering these global benchmarks currently.

After the announcement, shares of MCX slipped nearly four per cent, settling at around Rs 1,348 on Wednesday.

Data shows that the average daily turnover for February future contracts on MCX stood at Rs 2,822 crore. The total value for December futures and January futures stood at Rs 67,148 crore and Rs 47,302 crore, respectively.

In its latest investor call, NSE had stated that the bourse has further plans to enter carbon trading and to increase its activity in bonds, bond futures, electricity futures, commodities, and mutual funds. However, it will have to seek Sebi’s approval for each of the new launches.

The expansion is a part of the efforts to move away from non-core businesses and increase more offerings from what is allowed by the regulator.