MCX’s introduction of a 10-gram gold futures contract on April 1 will provide jewellers with a tool to hedge their inventory and implement flexible pricing schemes, according to Shivanshu Mehta, SVP and Head of the Bullion Department. He said the contract would enhance retail market engagement, as the 10-gram denomination has gained traction over the past year.

“We feel the usage of these products for jewellers is to hedge their inventory, to launch flexible pricing schemes, etc. That has sort of picked up critical mass. As far as retail is concerned, yes. Liquidity itself sort of proves that if on one side there are hedges, then on the other side there is ample retail,” Mehta told NDTV Profit.

He said the contract would serve as a risk management option for smaller and medium-sized jewellers. “We already have a 100-gram contract, and then we have a 1 kg contract. And the various hedging strategies for smaller and medium-sized jewellers between these three contracts are possible for risk management,” he said.

The 10-gram gold futures contract will be the first deliverable contract of its kind with transparent price discovery. It is designed for retail investors, offering systematic investment plan-type flexibility. The first expiry is on April 30, and the price quote will factor in international prices, currency fluctuations, and duty tariffs. The contract could draw increased participation from small investors who have largely stayed away from Nifty and Sensex index derivatives.

Highlighting its advantages, Mehta said, “Only Rs 300 are making charges. The price discovery is completely secular. You get tamper-proof, quality-assured products. So those are the advantages for retail, and it is evident in the delivery numbers of such products that we’ve already seen that people latch on and they hold on and take delivery and hold it electronically and even take it home.”

He highlighted that MCX already offers 1-gram and 8-gram coin contracts, and the addition of the 10-gram contract will strengthen the portfolio. The launch has been timed to coincide with Akshay Tritiya to encourage greater adoption.

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