The Multi Commodity Exchange of India Ltd. (MCX) plans to invest as much as 2 billion rupees (approximately $21 million) to launch specialized coal and minerals trading platforms. According to Managing Director Praveena Rai, the initiative aligns with government efforts to open up the sectors and improve price discovery and transparency in the domestic market.
As India's largest commodity exchange, MCX is actively seeking the necessary licenses to operate these new platforms. Regulatory filings indicate that the company has already incorporated separate business units to manage the coal and minerals trading operations.
Market regulator the Securities and Exchange Board of India (SEBI) has approved MCX's plan to invest about ₹1 billion in each of the two new businesses, Rai stated in Mumbai. In addition to SEBI's approval, the exchange requires licenses from the Coal Controller Organisation and the Indian Bureau of Mines, which serve as the respective licensing authorities for these sectors.
The policy development comes as the Indian government has notified new rules allowing commodity exchanges to facilitate the trading of coal, iron ore, bauxite, and other minerals. Under the framework, buyers and sellers will be permitted to trade physical delivery contracts through centralized electronic platforms. This mechanism is designed to establish a more transparent pricing system and enhance overall supply chain efficiency.
Prime Minister Narendra Modi’s administration has launched a portal to accept applications for licensing new coal exchanges, with a similar portal for mineral bourses expected to open soon. Industry projections indicate that the first exchanges in each segment will become operational in the financial year beginning April 1.
Commenting on the broader pricing dynamics, Rai noted that while India remains a major producer of coal and minerals, domestic prices are predominantly set abroad, creating a clear policy imperative for localized pricing reforms.
MCX currently derives the majority of its business from gold and energy derivatives trading. Data from an earnings presentation for the quarter ended June 30 shows that precious metals accounted for more than half of the exchange’s daily turnover, while energy segments—including oil, gas, and power—comprised approximately 40 percent.
Despite its current concentration in precious metals and energy, MCX anticipates growth across all segments. Rai emphasized the exchange's core focus on commodity markets and its objective to play a substantive role in developing these emerging market segments further.
Following the announcement, MCX shares climbed up to 3.1 percent to ₹3022.50, marking the highest intraday increase since August 12. Stock market data shows that MCX shares have risen by 32 percent over the course of the year.
"The expansion of MCX into coal and minerals trading represents a structural shift for India's commodity markets. By moving domestic price discovery onshore through centralized electronic platforms, the initiative addresses long-standing pricing inefficiencies. For businesses and industrial buyers, localized trading of physical delivery contracts will likely bring greater supply chain predictability and transparency as these exchanges become operational next fiscal year." — Dr. Shishir Gupta, Founder & CEO, StartupLanes
