NSE, SUFI sign MoU to develop steel, commodity derivatives ecosystem

The National Stock Exchange (NSE) and the Steel Users Federation of India (SUFI) signed an MoU to develop India's steel and commodity derivatives ecosystem, aiming to provide a price-risk management framework for the steel industry.

National Stock Exchange of India Limited (NSE) has signed a Memorandum of Understanding (MoU) with the Steel Users Federation of India (SUFI) to collaborate on the development and growth of the steel and commodity derivatives ecosystem in India.

Creating a Robust Price-Risk Framework

According to NSE, the partnership aims to create a "robust, transparent and efficient price-risk management framework" for participants in the Indian steel industry, enabling them to hedge price volatility through exchange-traded derivatives.

The initiative is expected to benefit stakeholders across the steel value chain, including steel manufacturers, processors, MSMEs, OEMs, infrastructure companies and end-users.

Scope of the Collaboration

Under the MoU, NSE and SUFI will jointly work on product design, market outreach, industry consultations, capacity building and awareness initiatives to support the development of steel and other relevant commodity derivatives products in India.

India is among the world's largest producers and consumers of steel, with the commodity widely used in sectors such as automobiles, engineering, infrastructure, capital goods and consumer durables.

According to NSE, the proposed contract is expected to provide an effective hedging mechanism and improve price discovery for participants in the domestic steel value chain.

NSE's Perspective on the Partnership

Sriram Krishnan, Chief Business Development Officer (CBDO), NSE, said, "The Indian steel industry has matured significantly and there is a growing need for transparent and efficient risk management tools."

"Our collaboration with SUFI is an important step towards building credible and liquid derivatives contracts that addresses the hedging requirements of the Indian steel market participants. NSE remains committed to developing innovative commodity derivative products aligned with the evolving needs of the industry," he added.

The statement said the MoU reflects the shared commitment of NSE and SUFI towards fostering a modern and globally competitive commodity derivatives market in India. (ANI)

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