MCX gains 4.5% to hit all-time high amid SEBI chief's comments on commodity derivatives, rise in precious metals

MCX gains 4.5% to hit all-time high amid SEBI chief's comments on commodity derivatives, rise in precious metals

Shares of Multi Commodity Exchange of India (MCX) hit fresh high on December 22 by climbing over 4.5% days after SEBI chairman said markets regulator is planning to constitute a working group to review the non-agricultural commodity derivatives segment. Further rise in precious metals also contributed to the MCX stock rally on December 22.

At 1:40 pm on December 22, MCX shares were trading 4.4% higher at Rs 10,759 apiece.

On December 20, Tuhin Kanta Pandey said that the working group will be notified shortly.

Speaking at the 11th International Convention of the Commodity & Capital Participants Association of India (CPAI), Pandey said SEBI is also engaging with the Reserve Bank of India (RBI) and the Insurance Regulatory and Development Authority of India (IRDAI) to enable the participation of banks and insurance companies in the commodity derivatives market.

According to him, enhanced institutional participation will bring in higher liquidity, making the market more attractive for hedging purposes.

"After due consultation with all stakeholders, we are going to form another working group to review the non-agricultural commodity derivative segment.

"This working group will be notified very shortly," the Sebi chief said.

Pandey said SEBI has already set up working groups to suggest measures to deepen the agriculture and commodity derivatives ecosystem. These expert groups are examining, among other aspects, whether the existing regulatory framework governing margins, position limits, and delivery and settlement mechanisms can be optimised without compromising market integrity.

He said the recommendations of these groups would help the regulator take necessary developmental measures.

Beyond institutional participation, Pandey highlighted the need to address taxation-related hurdles. He said Sebi will continue its engagement with the government to resolve Goods and Services Tax (GST) issues faced by market participants, particularly those seeking to receive or deliver commodities through exchange platforms.

"There are several GST-related challenges that need to be addressed. We will have to work closely with the GST Council Secretariat and the GST Council to resolve some of these critical issues to truly spur the development of commodity markets," he said, adding that this is especially important for both agricultural and non-agricultural segments, including gold.

Last week, Reuters reported, citing sources, that SEBI will recommend easing curbs on commodity derivatives and suggest steps to make it more attractive to institutional investors in a final report to be submitted early next year.

The panel will recommend lifting a ban on derivatives trading in seven agricultural commodities including paddy, wheat, crude palm oil, the report said.

Derivatives trading in these commodities has been repeatedly banned since 2021 due to concerns over speculative activity spilling over into on-ground prices of these widely consumed commodities.

The panel will present data that show price trends of these key commodities have not changed significantly before or after the ban, sources told Reugers.

The panel members suggested that derivatives trading has little impact on agricultural prices and therefore say the ban is not warranted, two sources told Reuters. The SEBI management concurred with this opinion, sources further told Reuters.

Futures contracts of precious metals gold and silver on the Multi Commodity Exchange of India hit fresh lifetime highs, tracking record high prices on COMEX. Bullion prices rose due to persistent purchases by central banks, increased expectations of further easing of interest rates in the US, weak US dollar and rising safe-haven demand amid geopolitical tensions between the US and Venezuela.

The US Coast Guard is pursuing an oil tanker in international waters near Venezuela, in what would be the second such operation over the weekend and the third in less than two weeks if successful, officials told Reuters on Sunday.

On the MCX, gold futures for February delivery climbed Rs 1,628, or 1.21%, to a new record of Rs 1,35,824 per 10 grams. The yellow metal had gained Rs 574, or 0.43%, during the past week.

Silver futures witnessed robust gains on the MCX. The white metal for March 2026 contract rallied sharply by Rs 6,144, or 2.95%, to touch an all-time high of Rs 2,14,583 per kilogram. It had zoomed Rs 15,588, or 8.08%, over the past week.

"Gold and silver prices began the week by touching fresh lifetime highs in both domestic and international markets," Rahul Kalantri, Vice-President of Commodities, Mehta Equities Ltd, said. The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading flat at 98.60, lending further support to bullion prices.

On the global front, Comex gold futures for February delivery gained $42, or 0.96%, to hit a record of $4,429.3 per ounce.

Comex silver futures for March 2026 contract increased by $2.04, or 3.02%, to touch an all-time high of $69.52 per ounce in the overseas trade. The metal had risen by $5.48, or 8.84%, over the last week.

"Gold and silver prices surged to record highs inching near $4,400 and $70 on Comex, lifted by expectations of further US Federal Reserve rate cuts after last week's quarter-point reduction, sustained safe-haven demand, and a softer dollar," Manav Modi, Analyst – Commodity & Currency, Motilal Oswal Financial Services, said.