MOSL: MCX (Buy)-Much-awaited SEBI guidelines on options finally out-Expect trading to commence
​MCX: Much-awaited SEBI guidelines on options finally out; Expect trading to commence – in gold to start with – from Aug/Sep 2017
(MCX IN, Mkt Cap USD0.8b, CMP INR1047, TP INR1300, 24% Upside, Buy)
- The Securities and Exchange Board of India (SEBI) on 13 June 2017 released a circular to stipulate the necessary guidelines with respect to the product design and risk management framework for trading in options on commodity futures.
- MCX had cited that once the guidelines are out, options should start to get traded within a span of a month. We expect trading in commodity options (gold to start with) to commence from August/September 2017.
- We believe this welcome move amid tepid volumes on MCX in recent months should be sentimentally positive for the stock. We were building in contribution from options in our MCX volumes estimates from 2QFY18, which does not see any change post the announcement
- Eligibility criteria for selection of commodities: Options would be permitted on those commodities that are among the top five futures contracts in terms of total trading turnover value over the previous 12 months, and their ADT would need to be at least INR2b for agricultural commodities and INR10b for others. Initially, on a pilot basis, each exchange shall be allowed to launch options only on one commodity post the approval of the SEBI.
Multi Commodity Exchange of India Limited (MCX) is a holding company. The Company is engaged in Facilitating Trading, and Clearing and Settlement of Commodity Derivatives. It operates as a commodity futures exchange. It offers its products in various segments, such as Bullion, including Gold, Gold Mini, Gold Petal and Silver; Base Metals, including, Aluminum, Copper, Lead, Nickel and Zinc; Energy, including Crude Oil, Brent Crude Oil and Natural Gas, and Agro Commodities, including Cardamom, Cotton, Crude Palm Oil, Kapas and Mentha Oil. Its MCXCOMDEX is a real-time commodity index based on commodity futures price of an exchange. Other commodity indices developed by the Company include MCXAgri, MCXEnergy and MCXMetal. Its online trading platform is accessible to its members through its trader workstation or computer-to-computer link (CTCL) using multiple connectivity media, including point of presence (POP) connectivity, very small aperture terminal (VSATs) and the Internet.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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