MCX launches New Index Series on Commodity Futures

Mumbai: Multi Commodity Exchange of India Ltd (MCX), India’s largest exchange offering commodity derivatives, launched a new series of indices under the name MCX India Commodity Indices, or MCX iCOMDEX. These indices are based on commodity futures contracts traded on MCX and conform to the SEBI-prescribed guidelines for the design of commodity indices. Besides, MCX has ensured that the indices adhere to financial benchmarks set by the International Organization of Securities Commissions (IOSCO) in construction, administration and governance.
 
MCX iCOMDEX are excess return indices which consist of a Composite Index, Sectoral Indices and Single Commodity Indices. A composite index (MCX iCOMDEX Composite Index, consisting of eleven liquid futures contracts across different segments traded on MCX), two sectoral indices (MCX iCOMDEX Bullion Index and MCX iCOMDEX Base Metals Index) and four single-commodity indices (MCX iCOMDEX Gold Index, MCX iCOMDEX Silver Index, MCX iCOMDEX Copper Index and MCX iCOMDEX Crude Oil Index) are being disseminated under the MCX iCOMDEX series of indices. The live index values are being disseminated on a continuous basis through various modes. These indices have a base value of 10,000 as on December 31, 2015 and the historical index values since then are available on the MCX website.
 
Excess Return indices, like MCX iCOMDEX, provide a ‘roll return’ (generated as the underlying constituents are ‘rolled over’ on their expiry) over and apart from price returns. As such, they reflect the actual returns generated from holding a portfolio of futures, rather than physical commodities. Being an Excess Returns-based tradable index series, MCX iCOMDEX joins the ranks of global benchmark indices, such as S&P GSCI and Bloomberg Commodity Index, on which derivative products tracking the returns from the commodity prices can be launched.
 
Mr. P.S. Reddy, MD and CEO, MCX said, “The launch of MCX iCOMDEX series of indices reflects MCX’s aspiration of providing best-in-class benchmarks to commodity investors, while fulfilling market stakeholders’ demand for appropriate underlying for index derivative products, which we plan to launch subject to regulatory approval. The indices conform to SEBI guidelines and have also been designed in line with IOSCO Principles for Financial Benchmarks, making them eligible for launching derivative products on them. We are confident that when products (viz. futures, ETFs, etc.) on these indices are launched, all classes of investors shall be able to take exposure to commodities/ commodity segments in a very cost-efficient manner.”