SEBI Approves MCX Proposal To Launch Electricity Derivatives

SEBI Approves MCX Proposal To Launch Electricity Derivatives

It will enhance efficiency in the power market

The Multi Commodity Exchange of India Ltd (MCX) has secured the approval of the Securities and Exchange Board of India (SEBI) to introduce electricity derivatives, offering power distribution companies and large consumers a tool to hedge against price volatility.

The contracts will provide a transparent platform for managing power price risks, which is crucial for renewable energy growth and market reforms.

Praveena Rai, the MD & CEO of MCX, expressed, "These contracts will offer participants a reliable, transparent and regulated platform to manage power price risks, which are becoming more dynamic due to renewables and market-based reforms."

He added, “With India's growing focus on renewable energy and open access power markets, electricity derivatives can serve as a vital bridge between the physical and financial sectors.”