MCX to include domestic bullion refineries for deliveries

MCX has updated its software system to quote and trade at minus prices, more than a month after it controversially settled crude oil contracts.
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Mumbai, Jun 14 (PTI) The largest commodities bourse Multi-Commodities Exchange (MCX) has decided to accept gold and silver bars refined at domestic refineries for deliveries, subject to final regulatory approval.

The move will widen the present delivery list, which is limited only to the London and Emirates gold and silver bars, and help increase delivery volumes of these metals.

“We are planning to include serially-numbered gold and silver bars from domestic refiners which meet the specified quality standard of the London Bullion Market Association (LBMA) and that of the Emirates gold bars,” MCX said in a statement on Sunday.

The specified purity/fineness for the gold and gold mini contracts is 995 (with provision to deliver higher quality with proportionate premium), while for the gold guinea and gold petal contracts it is 999; and for the silver bars, in silver mini and silver micro contracts, the fineness is 999, the exchange said.

Acceptance of bullion bars refined by domestic refineries for delivery via MCX contracts is subject to the refiners meeting the exchange-set criteria from time to time, the statement added.

The exchange had invited details from domestic refiners for this on January 23, 2020 and is awaiting regulatory approvals now and has received applications from several domestic refiners so far.

Selected refiners will have to undergo necessary documentation and submit an undertaking for the screening process comprising audits based on exchange-set criteria. This will include audits of financial parameters, audits of supply-chain and responsible sourcing, as well as audits of refining and assaying ability, it said.

Once shortlisted for empanelment to the MCX good delivery list, the refineries will have to submit necessary collaterals that may be in the form of bank guarantees/fixed deposits/personal guarantee etc.

MCX has a market share of 93.40 per cent by value of commodity futures contracts traded overall, and when it comes to bullion derivatives the same is 99.67 per cent, with that of gold futures at 99.01 per cent and silver futures at 99.70 per cent, respectively.

The exchange has deliverable bullion futures contracts in multiple denominations like gold (1 kg), gold mini (100 g), gold guinea (8 g), gold petal (1 g); silver (30 kg), silver mini (5 kg), and silver micro (1 kg).


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