Multi Commodity Exchange of India (MCX), headquartered in Maharashtra, India, received approval from the Securities and Exchange Board of India (SEBI) on June 7, 2025, to introduce electricity derivatives. This move is expected to empower power generators, discoms, and large consumers with tools to hedge against electricity price volatility and strengthen risk management.
Multi Commodity Exchange of India Ltd. (MCX), India’s leading commodity derivatives exchange based in Maharashtra, has received regulatory approval from the Securities and Exchange Board of India (SEBI) to launch electricity derivatives. The move marks a significant milestone in the evolution of India’s energy market, aligning with the country’s efforts to develop a more efficient and risk-managed electricity ecosystem.
In a statement released on June 7, MCX acknowledged the support of both SEBI and the Central Electricity Regulatory Commission (CERC) in facilitating this initiative, stating that it would contribute toward a more dynamic and sustainable power market.
The new electricity derivatives contracts are designed to allow power generators, distribution companies (discoms), and large-scale consumers to hedge against price volatility. These contracts will enhance risk management and improve the efficiency of operations in the electricity sector, which has grown increasingly complex due to the rising share of renewable energy and market-based reforms.
Introducing electricity derivatives marks a pivotal development in India’s commodities ecosystem. 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 open access reforms.”
Praveena Rai, Managing Director and CEO of MCX
Rai added that with India’s increasing focus on renewable energy, such contracts could bridge the physical and financial electricity markets, offering a structured way to navigate the changing energy landscape.
Founded in 2003, MCX has grown to command nearly 98% of the commodity futures market in India by value for FY 2024–25. The exchange enables trading across various segments such as bullion, energy, metals, agricultural commodities, and sector-specific indices.
This development is poised to enhance liquidity and confidence in India’s electricity market, providing critical tools for energy sector stakeholders to make more informed and stable financial decisions.
