The Multi Commodity Exchange (MCX) has sought approval from the Securities and Exchange Board of India (Sebi) for introducing liquidity enhancement schemes for its recently launched gold options contracts.
“MCX is facing some issues with gold options contracts. It has sought permission to launch liquidity enhancement schemes to boost volumes. We are considering it,” said Sebi Chairman Ajay Tyagi on Tuesday on the sidelines of an event organised by the Association of Investment Bankers of India.
Launched in October, MCX’s gold options contracts have not taken off. Their daily average turnover declined to Rs 130 crore in November from Rs 297 crore in October. The daily average turnover of gold futures contracts on the exchange was Rs 2,054 crore and Rs 2,297 in October and November, respectively.
By volume, the ratio of gold options contracts to gold futures contracts slipped to less than 3.5 per cent in December from over 14 per cent in October. Before the launch of the gold options contract, market participants were anticipating volumes in this segment would climb to at least two times those of gold futures contracts.
Sebi has specified guidelines for certain volumes in existing gold options contracts before allowing contracts of smaller denominations. Sources said MCX was likely to engage jewellers and organise awareness programmes to increase volumes in gold options contracts.
Asked about new products being considered for launch by Sebi, Tyagi said, "Options trading in guar is pending on the National Commodity and Derivatives Exchange (NCDEX).”