Mumbai: Multi Commodity Exchange of India Ltd (MCX) today announced that Harmony Hedge Fund, a Category III Alternative Investment Fund (AIF), has become the first institutional participant on its platform. Institutional participation in commodity derivative markets is being awaited for the last 14 years since inception. This follows within a month of the permission accorded by the Securities and Exchange Board of India (SEBI), vide its Circular dated 21 June, 2017, for Category III Alternative Investment Funds to participate in the commodity derivatives market.
While permitting AIFs in the commodity derivatives market, SEBI had indicated that the market in India currently lacks liquidity and depth for efficient price discovery and price risk management, which can be attributed to the absence of institutional participation in this market. It had also stated that various committees including those constituted by the Government of India have, in the past, recommended participation of institutional investors in the commodity derivatives markets, for improving the quality of price discovery and enabling more effective price risk management. The entry of Harmony Hedge Fund, the first AIF in commodity derivatives market, is considered significant in this context.
Mr. Mrugank Paranjape, MD & CEO, MCX, said “We welcome the entry of Harmony Hedge Fund, the first Alternative Investment Fund, which is the first category of institutional participants in the commodity derivatives market. The entry of this institution, I am sure, will spur the interest and participation of other AIFs too, whose collective presence will lend significant depth and vibrancy to India’s commodity derivatives market”.
Mr.Madhavan, CEO of the Harmony Hedge Fund said, “We and our clients have long been looking forward to opportunities for better risk-weighted and inflation-hedged returns, while diversifying our portfolios, which exposure to commodities can provide. SEBI’s permission to AIFs to trade in commodity derivatives gives us that opportunity, which we are happy to explore. We are also excited to be a part of India’s growing commodity derivatives market and look forward to many a new exciting opportunity that this new market segment has to offer.”