MCX receives SEBI nod to launch electricity derivatives: How will this help power discoms?

Commodity exchange MCX has received approval from the markets regulator SEBI to launch electricity derivatives. “This development underscores the strong commitment and support of the Regulators – SEBI and Central Electricity Regulatory Commission (CERC) – in enabling a dynamic and sustainable power market,” MCX said in a statement Friday, announcing the development.

The electricity derivatives contracts to be introduced by MCX will enable generators, distribution companies, and large consumers to hedge against price volatility and manage price risks more effectively, by enhancing efficiency in the power market.

Praveena Rai, MD and CEO, MCX, said in the statement that introducing electricity derivatives marks a pivotal development in India’s commodities ecosystem.

“These contracts will offer participants a reliable, transparent, and regulated platform to manage power price risks, which are becoming more dynamic due to renewables and market-based reforms. With India’s growing focus on renewable energy and open access power markets, electricity derivatives can serve as a vital bridge between the physical and financial sectors,” the MCX MD and CEO added.

MCX or Multi Commodity Exchange of India has been operational since 2003. According to MCX, it is India’s leading commodity derivatives exchange, with a market share of about 98 per cent in terms of the value of commodity futures contracts traded in the financial year 2024-25.

MCX offers trading in a diverse range of commodities, spanning multiple segments including bullion, energy, metals, and agri commodities, as well as sectoral commodity indices.