METLDEX to be first tradeable real-time base metals indices in country: MCX

Mumbai: The METLDEX, the maiden base metal futures indices from MCX, which is going live from Monday, is set to change the way prices are discovered as the indices will be traded on the real-time domestic prices. As of now, domestic metal prices are hinged to the London Metal Exchange (LME) prices which has been a deterrent to real-time price discovery. But with METLDEX, this is going to end, the country’s largest commodities bourse said, adding these indices will be the first tradeable real-time base metals indices in the country.

METLDEX is based on the five base metals– zinc, copper, nickel, lead and aluminium –which are traded on the MCX.

“With the launch of the iComdex base metals indices futures or METLDEX, we are setting a benchmark based on domestic price standards.

“METLDEX is conceptualised as an efficient tool for market participants to gain exposure to the industrial sector. This will also facilitate efficient price risk management across the value chain for even smaller players,” Chittaranjan Rege, head of base metals at MCX, told on Friday.

The futures contracts on the indices will be available for trading throughout the year with at least three contracts at all times, he added.

The contract has a lot size equal to 50 times of the underlying base metals index. The tick size for the contract is Re 1 and the contracts will be settled in cash at the end of the expiry of each contract.

“The final settlement price will be based on the volume weighted average price of the underlying constituents between 4 pm and 5 pm on the expiry day of the index futures contract,” he said.

The index will track the real-time performance of a basket of MCX base metals futures — zinc (5 metric tonne), copper (2.5 mt), nickel (1.5 mt), lead (5 mt) and aluminium (5 mt).

At present, it carries around 33.06 per cent weight for zinc, 29.81 per cent for copper, 14.77 per cent for nickel, 12.88 per cent for lead and 9.48 per cent weight for aluminium, the exchange said.

METLDEX is the second commodity futures contract to be launched by MCX after the successful launch of its bullion index, Bulldex, on August 24, which is the country’s first index on underlying bullion futures contracts, expiring in September, October and November.

The index has received encouraging response from market participants with the September expiry contract of Bulldex concluded on September 23 with a record open interest of 646 lots.