In its endeavour to offer new products to commodity market participants and to deepen the market ecosystem, the BSE on Monday launched options on goods contracts like gold mini and silver kilo. The two contracts launched are gold mini (100 gram) and silver kilo, the exchange said in a statement.
These contracts were launched by S K Mohanty, whole-time member of markets regulator Sebi, who emphasised that this is the right time for the launch of these contracts.
“The options on goods contracts shall enable small-time jewellers, retailers to come forward and hedge their price risk on the BSE’s commodity platform,” said Ashishkumar Chauhan, MD and CEO of the BSE.
Sameer Patil, chief business officer of the BSE, said these contracts are deliverable contracts and shall terminate into physical deliveries at the time of expiry.
The National Stock Exchange will introduce options on gold mini from June 8. Options contract gives the buyer or holder of the contract the right (but not the obligation) to buy or sell the underlying asset at a predetermined price within or at the end of a specified period.
Last year during January, BSE had received Sebi’s approval to launch Gold Mini, Guarseed and Guargum Future contracts on its commodity derivatives segment. These future contracts are monthly compulsory deliverable contracts with lot size of 100 grams, 10 tonne and 10 tonnes, respectively.
Of late, the exchange has been entering into agreements with various agricultural premier associations and warehouse service providers in India for the growth and development of commodity derivatives markets in the agricultural complex.
BSE commenced trading in gold and silver contracts on October 1, 2018 to mark its entry into the commodity derivatives segment and become the country’s first universal stock exchange with all asset classes including equity, mutual funds, currency and commodity in its portfolio. With BSE waiving transaction charges for the first year on commodities market operations, the commodity trading at BSE is gaining momentum and is bringing down an enormous cost for hedgers.