What is MCX – Multi Commodity Exchange?

What is MCX?

Multi Commodity Exchange (Full Form of MCX) as the name suggests is an exchange like BSE and NSE where commodities are traded. It is a platform for commodity traders that facilitate online trading, settlement and clearing of commodity futures transactions, thereby providing a platform for risk management (hedging). It was established in November 2003 under the regulatory framework of FMC. In 2016, the FMC was merged with SEBI and MCX as an exchange falls under the regulatory purview of SEBI.

Which commodities are traded on MCX?

Following types of commodities are traded on MCX

  • Bullion
    • Gold
    • Gold Mini
    • Gold Guinea
    • Gold Petal
    • Gold Petal (New Delhi)
    • Gold Global
    • Silver
    • Silver Mini
    • Silver Micro
    • Silver 1000
  • Base Metals
    • Aluminium
    • Aluminium Mini
    • Copper
    • Copper Mini
    • Lead
    • Lead Mini
    • Nickel
    • Nickel Mini
    • Zinc
    • Zinc Mini
  • Energy
    • Crude Oil
    • Crude Oil Mini
    • Brent Crude Oil
    • Natural Gas
  • Agro Commodities
    • Cardamom
    • Cotton
    • Crude Palm Oil
    • Kapas
    • Mentha Oil

As one can see the products chosen are essentially meant to be hedging instruments for the dealers in those commodities.

Market Operations:

Trading and Surveillance: A member of MCX performs trading operation using Trading Work Station, a platform for placing and executing orders

Clearing and Settlement: Activities pertaining to delivery, fund settlements, margins is monitored by an in-house clearing house.

Delivery: Delivery & Settlement of commodities traded are monitored and performed by Delivery Department. The department is a facilitator for delivery related documentation.

Warehousing and Logistics: This division caters to exchange members and their constituents with respect to their needs to store goods and give delivery through exchange platform

How is the spot price of a commodity determined?

What is MCX
Determination of Spot Prices on MCX

Prices are captured at identified basis centres by getting price quotes from various participants in the market and the overall value chain representing various levels viz. farmer, grader, miller, auctioneer, importers, traders etc, and then the prices are circulated after eliminating the outliers. This spot price is used for the settlement of derivative contracts on the MCX at the expiry of the contract.

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What is MCX

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