MCX has launched natural gas mini futures contracts. These will be available for trading from March 14, 2023. Initially, contracts expiring in April and May will be available for trading. Going forward, contracts for the subsequent months with 3 months expiry will become available on the exchange.
The minis will be available for 250 MMBtu trading units, while the maximum order size is fixed at 60,000 MMBtu. The market will calculate the position limit for the minis based on all the open positions of all variants of Natural Gas futures contracts available for trading.
Recently, MCX has introduced Crude Oil Minis and Metal Minis for Aluminium, Lead, and Zinc.
Calendar of the Natural Gas Futures Contracts
MCX has announced the launch and expiry dates of Natural Gas Minis, which will be available for trading from March 14, 2023.
| Contract Month | Contract launch date | Expiry date |
| April 2023 | March 14, 2023 | April 25, 2023 |
| May 2023 | March 14, 2023 | May 25, 2023 |
| June 2023 | March 29, 2023 | June 27, 2023 |
| July 2023 | April 26, 2023 | July 26, 2023 |
| August 2023 | May 26, 2023 | August 28, 2023 |
| September 2023 | June 28, 2023 | September 26, 2023 |
| October 2023 | July 27, 2023 | October 26, 2023 |
| November 2023 | August 29, 2023 | November 27, 2023 |
| December 2023 | September 27, 2023 | December 26, 2023 |
These contracts are introduced to encourage retail participation and will empower market participants to manage their price risks more efficiently.
Key details relevant to the Natural Gas Mini Futures Contracts
| Symbol | NATGASMINI |
| Description | NATGASMINIMMMYY |
| Contract Duration | 3 months |
| Trading Units | 250 MMBtu |
| Quotation/Base value | ₹ Per MMBtu |
| Maximum order size | 60,000 MMBtu |
| Ticket size (minimum price movement) | ₹0.10 (or 10 paisa) |
| Initial Margin | Minimum 10% or SPAN value whichever is higher |
| Extreme Loss Margin | 1% minimum |
| Maximum allowable open positions | For individual clients, 5% of the market wide open position or 60,00,000 MMBtu, whichever is higher, for all natural Gas contracts combined together.
For a member collectively for all clients, 20% of the market wide open position or 6,00,00,000 MMBtu, whichever is higher for all Natural Gas contracts combined together |
| Settlement Mechanism | All contracts are cash settled |
Benefits of trading in MCX Futures Mini Contracts
- The Natural Gas mini futures contracts will target smaller traders and encourage them to participate more.
- You can place lower bets with Natural Gas minis. It will reduce your market exposure.
- These will increase the number of market participants. You can use these contracts to diversify your portfolio in commodity trading.
- These contracts will improve market liquidity. As a result, you may see increased investment in the product.
The newly introduced MCX Natural Gas mini contracts will be cash settled on the New York Mercantile Exchange.
Final words
The existing standard Natural Gas contract size is 1250 MMBtu, which is quite large. Natural gas is one of the highly volatile commodities, and its price moving 10% up or down on a single day is quite possible. The reduced trading units introduced with the Natural Gas Mini contracts will allow traders to manage and reduce their risks on the commodity.
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