MCX Receives SEBI Approval to Launch Electricity Derivatives

The Multi Commodity Exchange of India (MCX) has received formal approval from the Securities and Exchange Board of India (SEBI) to introduce electricity derivatives. The development was announced in a regulatory filing dated June 6, 2025.

MCX Gets SEBI Approval For Electricity Derivatives

The new contracts are linked to electricity prices and will allow power generators, distribution companies, and large industrial consumers to hedge against price fluctuations. These instruments are expected to be cash-settled, placing them under SEBI’s sole regulatory oversight, as per existing rules.

Long-Standing Matter 

The launch of these contracts brings resolution to a jurisdictional issue that had remained unresolved for years. The matter originated during the period of the now-defunct Forward Markets Commission (FMC), which was merged with SEBI in 2015. SEBI and the Central Electricity Regulatory Commission (CERC) had previously formed a joint working group to decide the regulatory framework for such instruments.

In February 2025, SEBI informed stakeholders that electricity derivatives could be introduced, provided exchanges submit revised proposals in line with mutually agreed contract specifications.

Exchanges Begin Rollout

MCX is the first to receive SEBI’s final approval, while the National Stock Exchange (NSE) mentioned in its May earnings call that it had received in-principle clearance to launch similar products. Details about the timeline for product launch are yet to be disclosed.

MCX Market Leader in Commodity Futures Trading

MCX currently holds about 98% market share in the commodity futures segment by value. Its portfolio includes contracts in metals, energy products, bullion, and other commodities. The addition of electricity derivatives expands its offering in line with regulatory allowances.

Read more: What is MCX Trading: How to Trade MCX Commodity!

MCX Share Price Performance

On June 6, 2025, MCX share price closed at ₹7,418, a 4.49% increase for the day, with a YTD rise of 17.96% and a 104.17% increase over the past year.

Conclusion

The formal approval for electricity derivatives is a procedural step toward expanding India’s power market instruments. With regulatory backing now in place, exchanges are to introduce contracts aimed at improving risk management options in the electricity sector.

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