NSE to Launch Gold 10 Grams Futures from March 16 After Sebi Approval
The National Stock Exchange (NSE) is set to introduce its innovative Gold 10 grams futures contract on March 16, following regulatory approval from Sebi. This new contract aims to enhance retail participation by offering a smaller lot size and implementing structured risk safeguards.
Key Features of Gold 10 Grams Futures
– Contract Size and Trading Unit: Each contract represents 10 grams of gold, identified by the symbol GOLD10G. The contract listing format will be GOLD10GYYMMM, indicating the year and month of expiration.
– Trading Schedule: Trading will occur Monday through Friday, allowing trades from 9:00 am to 11:30 pm or until 11:55 pm, depending on the US daylight saving time.
– Monthly Series: Contracts will be listed on a monthly basis, expiring on the last calendar day of the month. Should this day be a holiday, the previous working day will serve as the expiry date.
– Tick Size: The tick size is set at Re 1 per 10 grams, with a maximum allowable order size of 10 kg.
– Price Quote: Prices will be quoted ex-Ahmedabad and will include all applicable taxes and levies on import duties, however, GST and any additional surcharges will be excluded.
Risk Management and Trading Parameters
– Price Movement Safeguards: A base daily price limit of 6% has been established. If exceeded, a 15-minute cooling-off period will allow the limit to be relaxed to 9%. Further adjustments may occur based on significant movements in international markets.
– Margins: Determined through either volatility categories or SPAN, the margins will additionally incorporate a 1% extreme loss margin. Increased margins may apply when volatility heightens.
– Position Limits:
– For members collectively for all clients, a maximum open position will be 50 metric tonnes or 20% of the market-wide open position, whichever is greater.
– For individuals, the cap will be 5 metric tonnes or 5% of the market-wide open position.
Compulsory Delivery and Settlement
– Delivery Details: The contract mandates compulsory delivery, with a unit of 10 grams of 999 purity gold sourced from LBMA-approved or NSE-approved suppliers. Each delivery will be accompanied by a quality certificate.
– Delivery Center: The primary delivery center will be located at the clearing house facilities in Ahmedabad. Delivery pay-in will occur on an E+1 basis by 11:00 am, excluding weekends and trading holidays.
– Settlement Price: The final settlement price will hinge on the Ahmedabad spot price for gold (10 grams) at 995 purity, adjusted to 999 purity, and polled at around 5:00 pm on expiration day. In case of disruptions in the physical market, the NSE will collaborate with Sebi to set the final price.
The introduction of the Gold 10 grams futures contract is poised to significantly enhance engagement from retail investors and smaller market participants, aligning closely with local bullion trading customs. By making gold trading more accessible, the NSE aims to bolster participation and liquidity in the commodity derivatives segment, ultimately enriching the trading experience for all.