Introduction to Multi Commodity Exchange (MCX)
Multi Commodity Exchange (MCX) is an exchange where commodities like crude oil, lead, gold, etc are traded.
What is MCX?
Headquartered in Mumbai, the Multi Commodity Exchange was established in November 2003 and was initially regulated by FMC. in 2016, MCX was put under the regulatory purview of SEBI as FMC was merged with SEBI.
It is an online platform that allows commodity traders to do online trading, clearing and settlement of commodity future transactions, thus offering a platform for hedging.
What is traded on MCX?
If you are looking for the type of commodities you can trade on the Multi Commodity Exchange (MCX) then here’s a list to help you out.
Bullion
Gold
Gold Guinea
Gold Mini
Gold Petal
Gold Global
Silver
Silver Mini
Silver Micro
Silver 1000
Energy
Crude Oil
Crude Oil Mini
Brent Crude Oil
Natural Gas
Base Metals
Aluminium
Aluminium Mini
Copper
Copper Mini
Lead
Lead Mini
Nickel
Nickel Mini
Zinc
Zinc Mini
Agro Commodities
Cardamom
Cotton
Crude Palm Oil
Kapas
Mentha Oil
These products are chosen based on their ability to be used as hedging instruments for the dealers in those commodities.
Factors That Affect Commodity Prices on MCX
Demand and supply are one of the fundamental factors that affect commodity prices and varies depending on a number of factors like season, domestic and global conditions.
Geopolitical factors influence commodity prices in positive as well as negative ways.
Cost includes the money spent on R&D, raw materials, wages of workers, taxes, etc which makes it another factor that influences commodity prices.
Technology is a very important factor when it comes to affecting commodity prices as the more technology advances the better yield we will get with lower marginal costs.
Advantages of MCX
The main advantages of MCX are:
It brings transparency to the table and presents everything in an organized structure which helps in making an informed choice.
MCX provides a number of opportunities like several months contracts of derivatives and options that provide liquidity and diversification.
