Commodity exchanges have welcomed SEBI's move to allow options trading from today on commodity bourses.
With an aim to deepen the commodity derivatives markets and enhancing liquidity, the markets regulator today allowed options trading on commodity exchanges.
This was a long pending demands from the exchanges, investors and market participants. So far, only future trading was permitted on commodity bourses.
"Introduction of options would deepen and transform the Indian commodity derivatives markets both in terms of products and participants. It will also complement the existing futures contracts and would make Indian commodity derivatives more vibrant and efficient," MCX MD & CEO Mrugank Paranjape said in a statement here.
It will also provide for inclusive development of the market and encourage cost effective hedging for participants like farmers and SMEs, Paranjape said.
Commodity bourse, NCDEX said SEBI has announced the introduction of options on the occasion of its first anniversary of taking over the commodity market regulation.
This historic step will go a long way in significantly deepening the commodities market. We are extremely excited and welcome this decision which will help expand the product basket and make it attractive for new participants. For the farmers, it will be a game changer, NCDEX said.
It would help them to sell their produce in the derivatives market and thereby get the benefit of price protection in case the price falls below their cost of production and also derive the benefit of any rise in price.
Options are also a much better hedging instrument as compared to futures for hedgers, it added.
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