NSE, IGX team up to launch natural gas derivatives for risk management

NSE partners with IGX to launch Indian natural gas derivatives based on IGX's GIXI benchmark. The collaboration aims to provide risk management tools, deepen liquidity, and strengthen India's domestic natural gas market. SEBI has approved the launch.

NSE Partners with IGX for Natural Gas Derivatives

National Stock Exchange of India (NSE) on Wednesday announced a collaboration with Indian Gas Exchange Limited (IGX) to introduce exchange-traded derivatives based on natural gas traded and delivered on the IGX platform. The initiative aims to strengthen India's domestic natural gas market by providing efficient risk management tools to market participants.

As part of the collaboration, NSE will launch Indian natural gas derivative contracts based on IGX's benchmark price index GIXI (Gas IndeX of India). These contracts will be designed to reflect domestic gas market dynamics, with pricing linked to actual trades on the IGX platform.

The proposed contracts are expected to offer a transparent and reliable risk management mechanism for stakeholders across the gas value chain. They will also provide financial institutions, exchange-registered brokers and investors with a new investment avenue in domestic natural gas market derivatives.

SEBI Approves Launch

NSE has received approval from the Securities and Exchange Board of India (SEBI) to launch Indian Natural Gas Futures. The exchange said that the launch dates for the contracts will be announced shortly.

A 'Significant Milestone' for India's Gas Ecosystem

Sriram Krishnan, Chief Business Development Officer (CBDO), NSE, said that the collaboration marks a significant step in the development of India's gas ecosystem. "Our collaboration with IGX represents a significant milestone in the development of India's gas ecosystem. The collaboration enables NSE to become the first ever Indian Exchange to launch a domestic benchmarked energy derivatives contract," he said.

He further added that the introduction of derivatives based on IGX benchmarks would help create robust risk management tools aligned with the domestic physical gas market.

"We believe that Indian Natural Gas futures will enhance market efficiency, deepen liquidity, and support the growth of a transparent and competitive gas market in India," he said.

Expanding Commodity Derivatives Segment

The exchange said that the move is part of its broader strategy to expand its commodity derivatives segment by introducing products based on credible domestic benchmarks.

It also reflects NSE's effort to meet the evolving needs of market participants by offering instruments that are closely linked to the underlying physical markets. The collaboration is expected to play a key role in developing a more structured and efficient natural gas market in India.

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