MCX Launches Electricity Futures to Broaden Commodities Portfolio

09 Jul 2025 CW Team

With electricity demand rising and price volatility influenced by seasonal trends, fuel costs, and market fluctuations, the new contract is designed to offer a robust risk management tool to power producers, distribution companies, large industrial consumers, and financial participants. It also adds a new asset class for investors looking to diversify portfolios with energy-linked instruments.

The Electricity Futures Contract will be available for all 12 calendar months, with trading initially open for the current and next three months. Key contract details include:

Trading unit: 50 MWh
Quote: Indian Rupees per MWh (excluding taxes/levies)
Tick size: Rs 1 per MWh
Settlement: Cash-settled based on the Volume Weighted Average of the Unconstrained Market Clearing Price (UMCP) from the Indian Energy Exchange (IEX) for all days in the expiry month

The contract will adhere to SEBI’s Daily Price Limits, starting at 6 per cent and extendable to 9 per cent in a single day. Initial margins will be 10 per cent or VaR-based, whichever is higher. Client-level position limits are capped at 3 lakh MWh or 5 per cent of market-wide open interest, whichever is greater.

Praveena Rai, MD & CEO, MCX, stated, “Electricity pricing is influenced by a wide range of demand and supply variables, from weather and seasonal shifts to peak usage patterns. The launch of Electricity Futures is aligned with our goal of offering innovative market instruments that support transparent, efficient, and forward-looking price discovery. This product will help deepen India’s energy markets and move us closer to the vision of a market-driven, sustainable power pricing system.”

Multi Commodity Exchange of India (MCX), India’s leading commodity derivatives exchange and the world’s largest commodity options exchange (FIA, 2024), has announced the launch of its Electricity Futures Contract, effective Thursday, 10 July 2025. The launch follows SEBI’s approval granted in June 2025 and marks a key milestone in India’s energy derivatives landscape.With electricity demand rising and price volatility influenced by seasonal trends, fuel costs, and market fluctuations, the new contract is designed to offer a robust risk management tool to power producers, distribution companies, large industrial consumers, and financial participants. It also adds a new asset class for investors looking to diversify portfolios with energy-linked instruments.The Electricity Futures Contract will be available for all 12 calendar months, with trading initially open for the current and next three months. Key contract details include:Trading unit: 50 MWhQuote: Indian Rupees per MWh (excluding taxes/levies)Tick size: Rs 1 per MWhSettlement: Cash-settled based on the Volume Weighted Average of the Unconstrained Market Clearing Price (UMCP) from the Indian Energy Exchange (IEX) for all days in the expiry monthThe contract will adhere to SEBI’s Daily Price Limits, starting at 6 per cent and extendable to 9 per cent in a single day. Initial margins will be 10 per cent or VaR-based, whichever is higher. Client-level position limits are capped at 3 lakh MWh or 5 per cent of market-wide open interest, whichever is greater.Praveena Rai, MD & CEO, MCX, stated, “Electricity pricing is influenced by a wide range of demand and supply variables, from weather and seasonal shifts to peak usage patterns. The launch of Electricity Futures is aligned with our goal of offering innovative market instruments that support transparent, efficient, and forward-looking price discovery. This product will help deepen India’s energy markets and move us closer to the vision of a market-driven, sustainable power pricing system.”

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