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What is MCX- The Best Guide For Commodity Investors

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What is MCX?

Multi Commodity Exchange (MCX) is an online platform for gold, silver, lead, copper, zinc, natural gas, etc. Buying and selling of commodities happen over MCX. These are Commodities. SEBI, the regulator of MCX, has made a physical settlement of commodities derivatives mandatory. Settlement of these commodities is in physical form, i.e. cash. 

MCX has headquarters in Mumbai and started its trade function in the year 2003. It is the largest commodity exchange in India.

Other Commodity Exchanges in India:

  • MCX (Multi Commodity Exchange).
  • ICE (Indian Commodity Exchange).
  • NMCE (National Multi Commodity Exchange).
  • NCDEX (National Commodity and Derivatives Exchange of India).

Commodities that are mined are also considered in this category of trade. These commodities are stored without fear of expiring or getting waste from any climatic conditions. Global economic factors, industrial production both are affected by commodities trades. Agriculture commodities are soft commodities, and the prices are volatile due to different weather conditions, which can harm agricultural products.

Margin In Commodity Trading.


The minimum amount of money that is kept with brokers to buy or invest in any commodities. It is generally between 5% to 10% of the total contract value.

There are three types of margin in Commodity trading:

1. Initial Margin

A minimum amount to pay to enter into future contracts.

2. M2M Margin

It is a market-to-market margin, where profit or loss is adjusted daily. It means that if you earn a profit in a day, money is transferred to your account from the clearinghouse, and if you lose, vice versa.

3. Special Margin

It is imposed by an exchange on certain commodities as a monitoring measure when there is more than 20% price movement in the same direction from a predetermined mark.

How’s The Price Determined In Mcx?
Commodities prices are determined through a price quote from various trade participants such as farmers, traders, auctioneers, importers etc. Prices are circulated on multiple levels. After that, a spot price is decided. This spot price is used to settle derivative contracts on the MCX at the expiry of the agreement.

How To Buy Or Sell Commodities On MCX?
MCX trading refers to buying and selling of commodities. One can buy or sell commodities on MCX via derivatives contracts (Futures and Options).

MCX offers different commodity segments These include—

  1. Bullion- Commodity derivatives in Gold & Silver.
  2. Industrial metals- Aluminium, Copper, Nickel, etc.
  3. Energy- Commodity Derivatives in Crude Oil and Natural gas.
  4. Agriculture Commodities- Cotton, Cardamom, Black Pepper, etc.

In MCX trading, there is also MCX BULLDEX which is the sector index that tracks the performance of Gold & Silver indexes on MCX.

To get fast and reliable MCX commodities updates, you can check the IIFL securities website. It provides commodity price quotes with multiple choice of dates. On IIFL Securities, you can also check various aspects of commodity shares like gainers/losers, most active contracts, top traded value, advance, decline, closing prices, and high & lows of commodities.

Conclusion:

Multi Commodity Exchange (MCX) is just like how you invest in stocks of various companies. Through commodities trading, you can invest in Gold, Silver, Cotton etc.

An MCX trading refers to buying and selling of commodity contracts. (from Futures and Options).

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