GOLD Multi Commodity Exchange of India Limited (MCX) is a state-of-the-art commodity futures exchange based in India. The exchange facilitates online trading in commodity futures contracts across segments, including bullion, base metals, energy, and agricultural commodities, besides offering clearing and settlement services. The exchange thus provides an effective mechanism for price risk management. INTRODUCTION =
Gold (Au) is primarily a monetary asset and partly a commodity.
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It is the world's oldest international currency.
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It is an important element of global monetary reserves.
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Demand for gold totalled 3,923.7 tonnes (t) in 2014. Jewellery demand was down by 10% to 2,152.9 t, but 5% above its five-year average.
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In 2014, investment in gold rose 2% to 904.6 t, although that in bar and coin fell almost 40% from the 2013 record of 1765 t.
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Central banks bought 477.2 t of gold in 2014, close to a 50-year high. Continued substitution pushed gold usage in technology-oriented demand to an 11-year low of 389 t.
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Total supply of gold in 2014 was flat—mine production was a record 3,114.4 t while recycling fell to a seven-year low of 1,121.7 t.
APPLICATIONS
MCX is a leading commodity exchange in India, with a market share of 84.06%* (2014-15) *In terms of the value of commodity futures contracts traded (Source: FMC Data, May 2015)
Gold has a long and fascinating usage history in a diverse range of industries and applications. In each of the applications it is used, gold provides an outstanding performance due to its unique technical properties of being one of the most malleable and ductile metals with high melting point and easy recyclability. Gold is a material of choice in medicine and dentistry as it is biocompatible. In recent years it has emerged as a key nanomaterial. Global demand for gold is centered on four primary categories: jewellery, investment, central bank reserves, and technology.
MARKET CHARACTERISTICS =
The gold market is highly liquid. Gold held by central banks and other major institutions and as retail jewellery is reinvested in the market.
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As the stock of gold outweighs its demand, it is argued that the core driver of the real price of gold is stock equilibrium rather than flow equilibrium.
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Traditional methods of portfolio diversification often fail when they are most needed, that is, during financial stress or instability. On these occasions, the correlations and volatilities of return for most asset classes (including traditional diversifiers, such as bonds and alternative assets) increase, thus reducing the intended “cushioning” effect of a diversified portfolio. However, with proven low or negative long-period correlation with other asset classes, gold stands out as an effective diversifier even during periods of instability.
GLOBAL SCENARIO, 2014
For private circulation only
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Total physical demand fell by 18% to a four-year low of 4158 t, as all areas, with the exception of official sector purchases, recorded year-on-year declines.
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Despite lower gold prices in dollar terms, jewellery demand dropped by 9%, largely on the back of a sharp decline in Chinese offtake.
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Industrial fabrication continued to slide, falling by 4% to 400 t, the lowest since 2003, due to weakness in all major sectors.
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Total identifiable investment, which includes physical bar investment and all coins and ETF inventory build, increased by 3%, primarily due to a slower pace of ETF selling. Meanwhile, retail purchases of gold bars and coins slumped by nearly 40%, largely due to the lack of interest from key Asian markets.
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Net official sector buying rose by 14% to 466 t, which was the second highest since 1964.
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Mine production increased for the sixth successive year in 2014, rising by 2% to a record volume of 3133 t.
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All-in cost fell by 25% to $1314/oz last year, as impairment charges fell back from highs touched in 2013. All-in cost, excluding writedowns, averaged $1208/oz.
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Producer hedging generated 103 t of accelerated supply in 2014, only the second year of net producer hedging since 1999.
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Global scrap supply retreated 13% in 2014 to a seven-year low of 1125 t, chiefly as a result of a weak dollar gold price and an improved economic environment.
INDIAN SCENARIO =
Globally, the year-on-year decline in gold demand in 2014 was observed in almost all countries. A few markets were notable exceptions to the downward trend, and India was foremost among these.
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Despite restrictions aimed at cooling gold imports, jewellery demand in India hit a record 662.1 t in 2014. A 19% gain in Q4 set the seal on a positive year. Fourth quarter growth was concentrated in October (Diwali) and November (wedding season), before import restrictions were withdrawn at the end of November.
DEMAND AND SUPPLY (in tonnes)
MCX is st India’s 1 listed exchange
World Supply Mine Production Scrap Net hedging supply Total Supply World Demand Jewellery Industrial Fabrication Net Official sector Retail Investment …of which bars ….of which coins Physical demand Physical Surplus/Deficit ETF Inventory Build Exchange Inventory Build Net Balance London PM fix (US$/oz)
2013
2014
3,061 1,287 -39 4,310
3,133 1,125 103 4,362
2,439 419 409 1,775 1.394 380 5,041 -732 -880 -98 246 1,411.23
2,213 400 466 1,079 829 251 4,158 204 -160 1 363 1,266.40
Source: LBMA, Thomson Reuters GFMS, World Gold Council.
Top ten producing countries 2014 Indonesia 116 Mexico 118
(in tonnes)
Ghana 108 China 462
Canada 154
South Africa 164
Australia 273 Peru 173 United States 205
Source: LBMA, Thomson Reuters GFMS www.mcxindia.com
Russia 262
FACTORS INFLUENCING THE MARKET =
Above-ground supply of gold from central bank sales, reclaimed scrap, and official gold loans.
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Hedging interest of producers and miners.
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World macroeconomic factors, such as movement in the dollar and interest rate, and economic events.
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Commodity-specific events, such as the construction of new production facilities or processes, unexpected mine or plant closures, or industry restructuring.
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In India, gold demand is also influenced by seasonality, that is, marriage and harvesting
34000
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MCX
MCX reaches out to over 1,900 cities and towns in India through 4,80,000+ trading terminals (including CTCL) (FY 2014-15)
$/troy ounce
1700
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36000
13
`/10 grams
MCX - International correlation
International
MCX gold volumes and open interest
(in lots)
1400000 1200000 1000000 800000 600000 400000 200000
Aggregate open interest
Ma y-1 5
No v-1 4
Ma y-1
4
3 No v-1
3 Ma y-1
No v-1 2
Ma y-1 2
No v-1 1
Ma y-1 1
No v-1 0
Ma y-1 0
No v-0 9
Ma y-0 9
0
Aggregate volume
(in lots) MCX Gold (all variants) - Average daily volume and open interest FY 13–14
www.mcxindia.com
FY 14–15
Commodity
Volume
Open interest
OI to Vol ratio
Volume
Open interest
OI to Vol ratio
GOLD
1,30,047
94,781
72.88%
48,340
51,374
106.28%
BENEFITS OF TRADING ON MCX =
India's no. 1 commodity exchange to trade bullion futures.
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Highly liquid contracts.
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Deliverable contracts with internationally accepted gold bars.
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Flexibility to choose from four different contract sizes—Gold (1 kg), Gold Mini (100 g), Gold Guinea (8 g), Gold Petal (1 g) and Gold Petal Delhi (1 g)—that best meet the needs.
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Gold Global: Rupee-denominated, international price-linked and cash-settled contract of 200 grams.
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Highly efficient and transparent market.
Top official gold holding countries as against their gold holding as a % of forex reserves, 2014 Country
Gold Holding (tonnes)
% of Forex Reserves
United States
8134
72.6
Germany
3384
67.8
Italy
2452
66.6
France
2435
65.6
Russia Federation
1208
12.1
China
1054
1.0
Switzerland
1040
7.4
Japan
765
2.4
Netherlands
612
55.2
Source: GFMS Ltd, WGC
MEASUREMENT Weight conversion table
MCX is the first commodity exchange in India to launch mini futures contracts in various commodities
To convert from Troy ounces
To Grams
Multiply by 31.1035
Million ounces
Tonnes
31.1035
Grams
Troy ounces
Kilograms
Troy ounces
32.1507
Tonnes
Troy ounces
32,150.70
Kilograms
Tolas
85.755
Kilograms
Taels
26.7172
Kilograms
Bahts
68.41
Troy ounces
Grains
Troy ounces
Avoirdupois ounces
Troy ounces
Penny weights
Avoirdupois ounces
Troy ounces
Short tonne
Metric tonne
0.0321507
480.00 1.09714 20.00 0.911458 0.9072
Gold purity is measured in terms of karat and fineness: Karat: pure gold is defined as 24 karat Fineness: parts per thousand Thus, 18 karat = 18/24 of 1,000 parts = 750 fineness
IMPORTANT WEB SITES www.gfms.co.uk | www.lbma.org.uk | www.nymex.com | www.tocom.com.jp | www.gold.org |www.kitco.com | www.dmcc.ae | www.iab.gov.tr | www.usagold.com
www.mcxindia.com
CONTRACT SPECIFICATIONS OF GOLD AND GOLD MINI SYMBOL
GOLD
GOLDM
Description
GOLDMMMYY
GOLDMMMYY
TRADING Trading unit
1 kg
100 grams
Trading period
Mondays through Fridays
Trading session
Monday to Friday: 10:00 am to 11:30 pm / 11:55# pm
Quotation/Base value
10 grams
Price quote
Ex-Ahmedabad (inclusive of all taxes and levies relating to import duty and customs, but excluding sales tax / VAT, any other additional tax or surcharge on sales tax, local taxes, and octroi)
Maximum order size
10 kg
Tick size
`1/10 grams (minimum price movement)
Daily price limit
The base price limit will be 3%. Whenever the base daily price limit is breached, the relaxation will be allowed upto 6% without any cooling off period in the trade. In case the daily price limit of 6% is also breached, then after a cooling off period of 15 minutes, the daily price limit will be relaxed upto 9%. In case price movement in international markets is more than the maximum daily price limit (currently 9%), the same may be further relaxed in steps of 3% and inform the Commission immediately.
MCXCOMDEX, India's first real time composite commodity futures price index is a market trends indicator
Initial margin
Minimum 5% or based on SPAN whichever is higher.
Additional and/or Special margin
In case of additional volatility, an additional margin (on both buy-side and sell-side) and/or special margin (on either buy-side or sell-side) at such percentage, as deemed fit, will be imposed in respect of all outstanding positions.
Maximum allowable open position*
For individual client: 5 MT for all Gold contracts combined together or 5% of the market wide open position whichever is higher, for all Gold contracts combined together. For a member collectively for all clients: 50 MT or 20% of the market wide open position whichever is higher, for all Gold contracts combined together.
DELIVERY Delivery unit
1 kg
100 grams
Delivery period margin
25% of the value of the open position during the delivery period
Delivery center(s)
Designated Clearing House facilities at Ahmedabad and at additional delivery centers at Mumbai, Chennai and Delhi/New Delhi and Hyderabad (for procedure please refer circular no. MCX/198/2005)
Delivery logic
Compulsory
QUALITY SPECIFICATIONS 995 purity
It should be serially numbered gold bars supplied by the LBMA approved suppliers or those suppliers, as may be approved by MCX, to be submitted along with the supplier’s quality certificate.
999 purity
If the seller offers delivery of 999 purity, the seller will get a proportionate premium, and the sale proceeds will be calculated in the manner of rate of delivery * 999/995.
Less than 995
Rejected
# US daylight saving timings. Note: Please refer to the exchange circulars for latest contract specifications * Genuine hedgers having underlying exposure that exceed the prescribed OI limits given in the contract specifications can be allowed higher limits based on approvals.
www.mcxindia.com
CONTRACT SPECIFICATIONS OF GOLD GUINEA SYMBOL
GOLDGuinea
Description
GOLDGuineaMMYY
TRADING Trading unit
8 grams
Trading period
Mondays through Fridays
Trading session
Monday to Friday: 10.00 a.m. to 11:30 pm / 11:55# pm
Quotation / Base value
8 grams
Price quote
Ex-Ahmedabad (inclusive of all taxes and levies relating to import duty, customs, but excluding sales tax / VAT, any other additional tax or surcharge on sales tax, local taxes and octroi)
Maximum order size
10 kg
Tick size
`1/8 grams (Minimum Price Movement)
Daily price limits
The base price limit will be 3%. Whenever the base daily price limit is breached, the relaxation will be allowed upto 6% without any cooling off period in the trade. In case the daily price limit of 6% is also breached, then after a cooling off period of 15 minutes, the daily price limit will be relaxed upto 9% In case price movement in international markets is more than the maximum daily price limit (currently 9%), the same may be further relaxed in steps of 3% and inform the Commission immediately.
MCX has strategic alliances with several commodity exchanges of the world
Initial margin
Minimum 5% or based on SPAN whichever is higher
Additional and / or Special margin
In case of additional volatility, an additional margin (on both buy & sell side) and / or special margin (on either buy or sell side) at such percentage, as deemed fit; will be imposed in respect of all outstanding positions.
Maximum allowable open position*
For individual client: 5 MT for all Gold contracts combined together or 5% of the market wide open position whichever is higher, for all Gold contracts combined together. For a member collectively for all clients: 50 MT or 20% of the market wide open position whichever is higher, for all Gold contracts combined together.
DELIVERY Delivery unit
8 grams and in multiples thereof
Delivery period margin
25% of the value of the open position during the delivery period
Delivery center(s)
Designated Clearing House facilities at Ahmedabad and additional delivery centers at New Delhi, Mumbai, Hyderabad, Bangalore, Chennai and Kolkata.
Delivery logic
Compulsory
QUALITY SPECIFICATIONS 999 purity
It should be serially numbered Gold Guinea supplied by LBMA approved suppliers or other suppliers as may be approved by MCX, to be submitted alongwith supplier’s quality certificate
Due date rate
Exchange shall announce the DDR based on the Ahmedabad Spot price for Gold (10gms) 995 purity, which shall be converted to 999 purity (Gold Spot price 995 purity* 999/995), polled on the last day of the expiry of this Gold Guinea contract by around 5.00pm. The arrived spot price will be converted for 8 gms Gold Guinea (Gold spot price per 10 gms X 8/10).
# US daylight saving timings. Note: Please refer to the exchange circulars for latest contract specifications * Genuine hedgers having underlying exposure that exceed the prescribed OI limits given in the contract specifications can be allowed higher limits based on approvals.
www.mcxindia.com
CONTRACT SPECIFICATIONS OF GOLD PETAL SYMBOL
GOLDPetal
Description
GOLDPtlMMMYY
TRADING Trading unit
1 gram
Trading period
Mondays through Fridays
Trading session
Monday to Friday: 10.00 a.m. to 11:30 pm / 11:55# pm
Quotation / Base value
1 gram
Price quote
Ex-Mumbai (inclusive of all taxes and levies relating to import duty, customs, but excluding sales tax / VAT, any other additional tax or surcharge on sales tax, local taxes and octroi)
Maximum order size
10 kg
Tick size
`1/1 gram (Minimum Price Movement)
Daily price limits
The base price limit will be 3%. Whenever the base daily price limit is breached, the relaxation will be allowed upto 6% without any cooling off period in the trade. In case the daily price limit of 6% is also breached, then after a cooling off period of 15 minutes, the daily price limit will be relaxed upto 9% In case price movement in international markets is more than the maximum daily price limit (currently 9%), the same may be further relaxed in steps of 3% and inform the Commission immediately.
MCX is certified to three ISO standards including ISO 9001:2008, ISO/IEC 27001:2005, ISO 14001:2004
Initial margin
Minimum 5% or based on SPAN whichever is higher
Additional and /or Special margin
In case of additional volatility, an additional margin (on both buy & sell side) and/ or special margin (on either buy or sell side) at such percentage, as deemed fit; will be imposed in respect of all outstanding positions.
Maximum allowable open position*
For individual client: 5 MT for all Gold contracts combined together or 5% of the market wide open position whichever is higher, for all Gold contracts combined together. For a member collectively for all clients: 50 MT or 20% of the market wide open position whichever is higher, for all Gold contracts combined together.
DELIVERY Delivery unit
8 grams and in multiples thereof
Delivery period margin
25% of the value of the open position during the delivery period
Delivery center(s)
Designated Clearing House facilities at Ahmedabad and additional delivery centers at New Delhi, Mumbai, Hyderabad, Bangalore, Chennai and Kolkata.
Delivery logic
Compulsory
QUALITY SPECIFICATIONS 999 purity
It should be serially numbered Gold Guinea supplied by LBMA approved suppliers or other suppliers as may be approved by MCX, to be submitted along with supplier’s quality certificate
Due date rate
Exchange shall announce the DDR based on the Mumbai Spot price for Gold (10gms) 995 purity, which shall be converted to 999 purity (Gold Spot price 995 purity * 999/995), polled on the last day of the expiry of this Gold Petal contract by around 5.00pm. The arrived spot price will be converted for 1 gms Gold Petal (Gold spot price per 10 gms X 1/10). No trading shall be allowed after the declaration of DDR
# US daylight saving timings. Note: Please refer to the exchange circulars for latest contract specifications * Genuine hedgers having underlying exposure that exceed the prescribed OI limits given in the contract specifications can be allowed higher limits based on approvals. www.mcxindia.com
CONTRACT SPECIFICATIONS OF GOLD GLOBAL SYMBOL Description TRADING Trading unit Trading period
GOLDGlobal GOLDGLOBALMMMYY
Trading session Quotation / Base value Price quote
Monday to Friday: 10:00 am to 11:30 pm / 11:55# pm 10 grams Ex-Ahmedabad (exclusive of all taxes relating to import duty, sales tax / VAT / Octroi as the case may be, and other charges / levies) 10 kg
200 grams Mondays through Fridays
Maximum order size
`1/10 grams (minimum price movement) The base price limit will be 3%. Whenever the base price daily price limit is breached, the relaxation will be allowed upto 6% without any cooling off period in the trade. In case the daily price limit of 6% is also breached, then after a cooling off period of 15 minutes, the daily price limit will be relaxed upto 9%. In case price movement in international markets is more than the maximum daily price limit (currently 9%), the same may be further relaxed in steps of 3% and inform the Commission immediately. Minimum 5% or based on SPAN whichever is higher. In case of additional volatility, an additional margin (on both buy side and sell-side) and/or special margin (on either buy-side or sell side) at such percentage, as deemed fit, will be imposed in respect of all outstanding positions. For individual client: 5 MT for all Gold contracts combined together or 5% of the market wide open position whichever is higher, for all Gold contracts combined together. For a member collectively for all clients: 50 MT or 20% of the market wide open position whichever is higher, for all Gold contracts combined together.
Tick size Daily price limit
Initial margin Additional and / or Special margin
Maximum allowable open position*
30 commodity futures contracts traded on MCX
DELIVERY Delivery unit Delivery center(s) Delivery logic QUALITY SPECIFICATIONS 995 purity
999 purity
Due Date Rate
200 grams without any tolerance limit Ahmedabad at designated Clearing House facilities Both option It should be serially numbered gold bars supplied by the LBMA approved suppliers or those suppliers, as may be approved by MCX, to be submitted along with the supplier’s quality certificate. If the seller offers delivery of 999 purity, the seller will get a proportionate premium, and the sale proceeds will be calculated in the manner of rate of delivery * 999/995. The DDR price will be calculated on the expiry date based on the International price on that day at RBI reference rate. The USD price of Gold (995 fineness) in troy ounce will be multiplied by 0.321507425 to get corresponding price in USD per 10 grams. This will be multiplied by RBI reference rate on the day of expiry to get price in INR per 10 grams and will be rounded to the nearest Rupee.
# US daylight saving timings. Note: Please refer to the exchange circulars for latest contract specifications * Genuine hedgers having underlying exposure that exceed the prescribed OI limits given in the contract specifications can be allowed higher limits based on approvals.
This product leaflet is not intended as professional counsel or investment advice, and is not to be used as such. While the exchange has made every effort to assure the accuracy, correctness and reliability of the information contained herein, any affirmation of fact in the product leaflet shall not create an express or implied warranty that it is correct. This product leaflet is made available on the condition that errors or omissions shall not be made the basis for any claims, demands or cause of action. MCX shall also not be liable for any damage or loss of any kind, howsoever caused as a result (direct or indirect) of the use of the information or data in this product leaflet .
Multi Commodity Exchange of India Limited Exchange Square, Suren Road, Chakala, Andheri (East) Mumbai 400 093, Tel. no.: +91-22-6731 8888 Email id:
[email protected],Website: www.mcxindia.com CIN: L51909MH2002PLC135594
170715
Customer Support: +91-22-6649 4040 | To get the latest futures prices on mobile: visit http://m.mcxindia.com
