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Sunday, January 24, 2021

MCX launches futures trading in natural rubber

The launch of rubber futures comes after strong demand from physical participants including small-mid sized producers/consumers and large physical side corporate houses.

By: PTI | New Delhi | December 28, 2020 5:14:48 pm
A rubber tree is tapped for its milk on a rubber farm in Mundur, Pallakhad, India, on Tuesday, May 20, 2008. (Photographer: Prashanth Vishwanathan/Bloomberg News)

Leading commodity bourse MCX on Monday launched futures trading in natural rubber.

At present, four contracts of rubber futures that will expire in January, February, March and April of 2021 are made available for trading.

The launch of rubber futures comes after strong demand from physical participants including small-mid sized producers/consumers and large physical side corporate houses.

“Given the huge market size for natural rubber in India in terms of production and imports, and its global price linkages and volatility, the launch of rubber futures on the exchange holds significance for industry stakeholders as an efficient hedging tool for managing price risk,” MCX CEO and Managing Director P S Reddy said in a statement.

Acumen Capital Market made the first trade in MCX rubber contact.

The futures contract enables market participants to trade in the rubber of ‘Ribbed Smoked Sheets4 (RSS4)’ quality for a minimum lot size of 1 tonne.

The rubber futures are of compulsory delivery logic contracts. They would finally be settled at expiry on the last business day of the contract month.

The tick size (minimum price movement) for the contract is Rupee 1. Pegged at a minimum initial margin of 10 per cent, the price to be quoted will be for 100 kg as per the ex-warehouse rates, exclusive of sales/GST with delivery centre at Palakkad, Kerala.

MCX rubber futures are available for trading from 9 am to 5 pm on weekdays.

The new rubber futures at the exchange aims at providing a fair and transparent price discovery mechanism that reflects fundamentals in the physical market, both domestic and global, to the rubber value chain participants including growers, traders, exporters, importers and end-users like the tyre industry.

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