Powering The Future: MCX Unveils India’s First Electricity Futures Contract

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The Multi Commodity Exchange of India Ltd (MCX) is set to revolutionize the energy derivatives landscape with the launch of its electricity futures contract on July 10, 2025. This strategic move follows regulatory approval from SEBI and aims to provide a robust hedging tool for stakeholders across the power ecosystem.

Key Developments At A Glance

- Electricity futures will be traded under the symbol ELECDMBL
- Contracts available for all 12 calendar months, with rolling listings for the current and next three months
- Each contract represents 50 MWh, quoted in INR per MWh (excluding taxes)
- Trading hours: Monday to Friday, 9:00 a.m. to 11:30 p.m./11:55 p.m.
- Settlement: Cash-based, using volume weighted average of unconstrained market clearing price (UMCP) from the day ahead market (DAM) at Indian Energy Exchange (IEX)
- Daily price limits: Initial cap of 6 percent, extendable to 9 percent
- Initial margin: Minimum 10 percent or volatility-based VaR, whichever is higher
- Position limits: 3 lakh MWh or 5 percent of market-wide open interest for clients; 30 lakh MWh or 20 percent for members

Strategic Significance And Market Impact

MCX’s electricity futures are designed to address the growing need for structured price risk management in India’s dynamic power sector. With increasing demand, volatile fuel costs, and seasonal consumption spikes, this contract offers:

- A transparent and liquid hedging mechanism for power generators, discoms, industrial consumers, and financial participants
- Portfolio diversification opportunities for investors
- Enhanced price discovery and market depth in energy trading

Contract Launch Timeline

1. August 2025 contract: Launches July 10, expires August 29
2. September 2025 contract: Launches post-August expiry, expires September 29
3. October 2025 contract: Launches post-September expiry, expires October 30

Leadership Perspective

MCX MD & CEO Praveena Rai emphasized the contract’s role in deepening India’s energy markets and supporting the national goal of sustainable, market-driven power pricing. She noted that electricity’s volatility—driven by weather, demand cycles, and sectoral loads—makes it a prime candidate for futures trading.

Broader Market Context

MCX holds a dominant 98 percent share in India’s commodity futures market and has long been a pioneer in product innovation. The electricity futures launch positions MCX ahead of competitors like NSE and BSE, who are also entering the segment following SEBI’s June 2025 approval.

Sources: Moneycontrol, BusinessWorld, The Hindu Business Line, Business Upturn, MarketScreener