The National Stock Exchange (NSE) is set to introduce electricity futures contracts from 14 July 2025, following regulatory approval from SEBI. These contracts will be listed under the Commodity Derivatives segment and will have expiries in August, September, and October, corresponding to 1-month, 2-month, and 3-month tenures.
This marks NSE's entry into a globally significant market, offering participants a way to hedge against electricity price fluctuations without physical delivery.
To boost liquidity in this new segment, NSE is rolling out a Liquidity Enhancement Scheme (LES) beginning 11 July 2025. This initiative is designed to encourage active trading and ensure smoother market operations. Participants permitted to trade include SEBI-approved entities such as trading members, power generators, corporate buyers, traders, and financial institutions.
The contract allows these players to fix the price of electricity for future months, offering financial risk management tools rather than physical power delivery.
NSE will appoint 2 Market Makers-MM1 and MM2-through a competitive bidding process, each serving a 6-month term. To qualify, applicants must have a net worth of at least ₹5 crore, no serious disciplinary records in the past year, and an active algo registration in the commodity derivatives segment.
MM1 and MM2 will receive monthly incentives of ₹85 lakh and ₹45 lakh, respectively, provided they meet the required quoting obligations. Market Makers must choose a single category (MM1 or MM2) when applying.
Read more: Top 10 Nifty 50 Stocks by Market Cap and 5-Year CAGR (July 2025)!
The launch of electricity futures marks a significant step for NSE in expanding its commodity offerings, aiming to deepen market participation and efficiency.
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.
Published on: Jul 3, 2025, 12:55 PM IST
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