Thomson Reuters and MCX launch India Commodity Indices

With the Securities and Exchange Board of India (SEBI) beginning to open up commodities derivatives to institutional investors, relevant investors will be able to leverage these indices not only to benchmark performance but to also build products.

Commodity index-based products would allow market participants to trade and invest in commodities on a short and long term basis.

The Thomson Reuters-MCX iCOMDEX series, utilize a similar methodology to other established commodity indices used by international investors, such as the popular Thomson Reuters/CoreCommodity CRB index.

MCX has worked with the Indian investors to ensure the new indices correctly represent Indian commodity markets, with Thomson Reuters validating this approach and ensuring the indices meet international standards such as the IOSCO principles for financial benchmarks.

The series include a composite index consisting of 11 commodities; sector indices for bullion and base metals, and individual commodity indices for gold, copper and crude oil. These indices have been designed to be tracked by derivatives and exchange traded funds, to allow investors to monetize views and manage investment risk.

As a part of the arrangement, Thomson Reuters will calculate and administer the indices, which would track the commodity futures prices traded on MCX, with MCX advising Thomson Reuters on index methodology and ensuring that it best meets the needs of Indian investors looking to increase their exposure to this asset class.

Speaking on the launch, Pradeep Menon, Managing Director, Global Head of Investing and Advisory, Thomson Reuters said, “Thomson Reuters is delighted to further strengthen its commitment to the region with the launch of this co-branded commodity index series with MCX. These indices will help investors effectively benchmark commodities across categories in real-time to make efficient investment decisions when index-based products are available in Indian commodity markets.”

Mrugank Paranjape, Managing Director and CEO, MCX, said: “The co-branded indices are an important addition to MCX’s portfolio and we are delighted to join hands with Thomson Reuters in developing and publishing them. The index series combines MCX price data and the exchange’s expertise of Indian Commodity markets with TR’s global benchmarking practices, distribution and compliant governance structures. Subject to regulatory approval, we would want to offer derivative products based on these indices, at an opportune time.”

Commenting on the announcement, Stephan Flagel, Global head of Benchmarks and Indices, Thomson Reuters said, “With our unparalleled expertise and decades of experience in providing benchmarks and indices for listed and OTC markets, we are excited about the many opportunities that this change in regulation has opened up for the Indian investor community.”

Dr. V. Shunmugam, Head, Research, MCX commented, “We are happy to launch the Thomson Reuters–MCX iCOMDEX series, which would be the first co-branded indices for the exchange. The index methodology, choice of underlying, their relative weightage and history of price movements have been kept as the cornerstones in developing these indices, so as to make them the benchmarks in their respective index classes”.

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