New products, longer-dated contracts, here is how MCX is expanding 

Multi Commodity Exchange Of India plans to expand its products basket, launching new contracts as well as far-dated contracts in its existing product basket, it's top official said on Wednesday.

"We do have approvals in place for quarterly contracts going into 12 and 18 months. These kind of products will suit large corporates or institutional investors," Praveena Rai, the MD and CEO of MCX told reporters.

Earlier this year, MCX received the green light for launching a new coal exchange subsidiary. It has also now received approval from SEBI for investment in a proposed minerals spot exchange.

"India has a good base in coal mining and now the other kind of minerals that we have in India will be the primary focus. We will align with government policy on what is necessary. Each one of these markets will take time to develop and establish. So I don't think multiple minerals will be taken up at the same time," Rai explained.

Weather-related derivative contracts is also something the exchange is exploring.

"Weather is certainly an important space to cover, because even as we look at electricity for example, there is a very tight linkage to weather. The entire rural economy, consumption economy also gets linked to what happens on weather. That is something that we have been working on," said Rai.

Rival NCDEX had earlier this year launched Rain Mumbai, a contract based on the south west monsoon.

MCX shares rose 2.6% on Wednesday even as the broader market ended in the red. On Tuesday, Sebi issued a consultation paper propossing to allow FPIs in non-cash-settled, or physically settled, non-agricultural commodity derivatives.

Rai welcomed the move saying it would help diversification and also create depth in the commodity market.

"FPIs have a high degree of interest across all the commodity segments. We do think that they will bring in that diversity of participation that will create a very healthy mix once it is formally formulated," she said.

According to Rai, the solution is "elegant" as it permits FBIs to participate without necessarily starting to have actual physical trade in the country as they are not residents of the country.