NSE to Launch Electricity Futures on July 11 With Liquidity Scheme to Boost Participation

In a significant move aimed at strengthening the commodity derivatives landscape, India’s leading bourse, the National Stock Exchange (NSE), has announced the launch of electricity futures contracts from July 11, 2025. Accompanying this launch is a Liquidity Enhancement Scheme (LES) designed to stimulate market participation and ensure efficient price discovery. This initiative is expected to empower market participants by offering new tools to hedge against electricity price volatility.

Electricity Futures Contracts: Features and Objectives

The new electricity futures will be available for trading from Monday to Friday between 9:00 am and 11:30 pm or 11:55 pm, depending on daylight saving adjustments. These contracts will be cash-settled and benchmarked to the market price published by the Power Exchange of India Ltd (PXIL). At any point, contracts for the current and the next 3 months will be open for trading.

Each contract will require a minimum margin of 10% or as determined by SPAN rules, and price movements will be subject to SEBI-mandated daily limits of 6%. Position limits have been capped at 30 lakh megawatt-hours (MWh) for trading members and 3 lakh MWh for individual clients. The contracts aim to help stakeholders, especially those in power generation and trading, manage price risk while improving the efficiency and depth of the power market.

Liquidity Enhancement Scheme (LES): Incentives and Criteria

To boost liquidity in the new segment, NSE will run a 6-month Liquidity Enhancement Scheme. Under this program, 2 market makers will be appointed through a bidding process, with the deadline for submissions set at July 2, 2025. Market Maker 1 (MM1) will quote near-month contracts, while Market Maker 2 (MM2) will manage next-month and far-month contracts.

Eligible trading members must meet several criteria: a minimum net worth of ₹5 crore, SEBI registration in the commodities segment, and prior experience in the electricity value chain. They must also maintain continuous buy and sell quotes during most trading hours. MM1 will be offered ₹85 lakh monthly, and MM2 will receive ₹45 lakh, contingent on meeting performance standards. If presence levels fall below 70%, no incentives will be paid, and early exits within two weeks of appointment will incur a penalty of ₹5 lakh.

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Conclusion

With this launch, NSE aims to provide a structured and regulated platform for electricity price risk management, addressing a long-standing gap in India’s commodity market. The introduction of LES further underscores NSE's intent to ensure active trading, price discovery, and long-term stability in this crucial sector.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.