Trading in Multi Commodity Exchange of India MCX will l4aunch the Natural Gas Futures Contracts starting from March 14, 2023. It will have two contracts that will be launched and expire on April 25, 2023, and May 25, 2023. This will be available for trading, expire within three months, and exchange.
Traders shall note the position limits and should compute considering in open position in all the variants of Natural Gas future contracts.
The trading unit is 250 MMBtu (Metric Million British Thermal Unit), and the minimum order size is 60,000. The margin will be the minimum order for the 10% based on SPAN, which is higher and would settle in cash.
The trading session will open at 9:00 am and close at 11:30 p.m./11:55 p.m. from Monday to Friday.
MCX has introduced Crude Oil Minis and Metal Minis For Almunium, Lead, and zinc.
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Calendar of the Trading in MCX Natural Gas Futures Contracts
This Trading in MCX has announced the launch and expiry dates for the Natural Gas Minis, which are available for trading between March and May 2023.
| Contract Month | Contract launch date | Expiry date |
| April 2023 | March 14, 2023 | April 25, 2023 |
| May 2023 | March 14, 2023 | May 25, 2023 |
| June 2023 | March 29, 2023 | June 27, 2023 |
| July 2023 | April 26, 2023 | July 26, 2023 |
| August 2023 | May 26, 2023 | August 28, 2023 |
| September 2023 | June 28, 2023 | September 26, 2023 |
| October 2023 | July 27, 2023 | October 26, 2023 |
| November 2023 | August 29, 2023 | November 27, 2023 |
| December 2023 | September 27, 2023 | December 26, 2023 |
Contract Specifications of Natural Gas Mini Futures
| Symbol | NATGASMINI |
| Description | NATGASMINIMMMYY |
| Contract Listing | Contracts are available as per the contract launch calendar. |
| Contract Start Day | As per the contract launch calendar |
| Last Trading Day | As per the contract launch calendar |
| Contract Duration | Maximum of 3 months at any point of time 3 months will be available for trading |
| Trading | |
| Trading Period | Monday through Friday |
| Trading session | Mondays through Friday 9:00 a.m to 11:30 p.m |
| Trading Unit | 250 MMBtu |
| Quotation Base Value | Rs. Per MMBtu |
| Maximum Order Size | 60,000 MMBtu |
| Trick Size (minimum price movement) | 10 paise (0.10 rupees) |
| Initial additional Margins | Minimum 10% or based on SPAN whichever is higher. |
| Extreme Loss Margin | Minimum 1% |
| Additional and/or Special Margin | Additional volatility may result in margins (on both the buy and sell sides) or special margins (on either side) being applied to all outstanding positions. |
| Maximum Allowance Open Position | Individual client: 60,00,000. MMBtu, or 5% of all Natural Gas contracts together. Collectively, 60,00,000 MMBtu for all clients or 20% of market wide open position, depending on which is greater, for all-Natural Gas contract combined. |
| Quality Specification | Natural Gas that meets the specifications of the FERC approved tariff for Sabine Pipe Line Company. |
| Due Date Rate (Final Settlement Price) | The due date rate will be the settlement price in Indian rupees of the New York Mercantile Exchange (NYMEX# Natural Gas) front month contract on last trading day for the MCX Natural Gas Mini Contract. Conversion will be done using the last available RBI USDINR rate. Rounding off the price will take place to the nearest tick. If, for example, the NYMEX Natural Gas, (NG) front-month contract settlement price at $3.440 per million BTU and the last available RBI USDINR rate reference rate of 80.4205, then the DDR for MCX Natural Gas Mini would be Rs. 276.60 per MMBtu (i.e. $3.440 * 80.4205, rounded to the nearest tick. #A market division at Chicago Mercantile Exchange Inc. (“CME Group”) |
| Settlement Mechanism | Contract would be settled in cash |
| Daily Price Limits | The Exchange has implemented a narrower slab of 4%. If the slab is broken, the exchange will allow a relaxation up to 6% with no cooling off period. If the daily price limit of 6p per day is breached, the cooling off period of 15 mins will allow the daily price limit to be relaxed up to 9%. If international market prices move more than the daily maximum price limit (currently 9.9%), then the price limit may be relaxed by 3%. |
Benefits Of Trading in MCX Futures Mini Contracts
- The natural gas mini futures contracts will be targeted to smaller traders.
- It allows you to place lower bets that will decrease your market exposure.
- These contracts trading in MCX will increase the number of market participants, and contracts can be used to diversify your portfolio for commodity trading.
- These contracts will increase the share market liquidity, leading to increased investment in your product.
Conclusion
The current standard Natural Gas contract size, 1250 MMBtu, is significant. Natural gas is volatile and can increase up to 10% daily. Natural Gas Mini contracts have fewer trading units, making it easier for traders to manage risk and lower their exposures.
