Electricity futures on MCX

Electricity futures on MCX are cash-settled financial derivatives on the price of power, launched on the Multi Commodity Exchange on 10 July 2025 as India’s first exchange-traded electricity contract and regulated by SEBI as the financial-derivatives regulator. The contract is the Electricity Futures (Monthly Base Load), which lets a participant lock in the price of a constant block of power for a future delivery month, settling entirely in cash with no physical power changing hands. Its launch followed a Supreme Court order of 6 October 2021 that ended a decade-long dispute between SEBI and the Central Electricity Regulatory Commission over who regulates power derivatives.

For a power sector that had long managed price risk through bilateral long-term power purchase agreements and a short-window term-ahead market, an exchange-traded futures contract is a structural change. A distribution company can now hedge against a price spike, a generator can lock a future selling price, and a large industrial consumer can fix its power cost in advance, all through a standardised, centrally cleared contract. This article sets out the contract’s design and the base-load delivery concept, the SEBI-CERC jurisdictional interface that had to be resolved before it could exist, who hedges with it and why, cash settlement, and the current state of retail availability on Zerodha .

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Launch and contract design

MCX launched the Electricity Futures (Monthly Base Load) contract on 10 July 2025, the first exchange-traded power derivative in India. The National Stock Exchange listed its own electricity futures from 14 July 2025, so two SEBI-regulated venues went live within days of each other. Both list electricity futures; electricity options, where the underlying would be the electricity future, were noted at launch as pending regulatory approval.

The MCX contract is built around a monthly base-load block. Base load is the steady, round-the-clock component of electricity demand, the power consumed evenly across every hour, as distinct from peak load, the higher demand in specific hours. A monthly base-load contract therefore references a constant block of power supplied evenly across every hour of the delivery month, and the futures price is the price of that block. This lets a buyer or seller fix the cost of a month’s steady power consumption or output in advance, insulating themselves from spot-price volatility, a shift away from the traditional reliance on long-term power purchase agreements toward market-based, dynamic contracting.

Sources: MCX launch circular for the Electricity Futures (Monthly Base Load) contract; broker contract-specification summaries; Zerodha Z-Connect launch note. Verify the precise tick value, last trading day and final-settlement formula against the live MCX contract circular before trading.

The trading-unit and margin figures above are drawn from the launch specifications. The trading hours follow the MCX non-agricultural schedule of 9:00 AM to 11:30 PM IST, extending to 11:55 PM during the US daylight-saving period for contracts on the standard MCX clock, as set out in the Zerodha MCX trading hours reference, though a trader should confirm the electricity contract’s exact session against the MCX circular. The minimum margin and minimum period of risk for electricity derivatives follow the SEBI commodity-derivatives risk-management framework under SEBI circular SEBI/HO/CDMRD/DRMP/CIR/P/2020/15 dated 27 January 2020.

The SEBI-CERC jurisdictional interface

The contract could not have been launched without first settling which regulator owned it, and that question stalled electricity derivatives in India for a decade. The dispute sat between two statutes. The Electricity Act empowers the Central Electricity Regulatory Commission (CERC) to develop electricity markets comprehensively, while the Securities Contracts (Regulation) Act, 1956 (SCRA) grants SEBI exclusive authority over securities derivatives. Electricity is a physical commodity that CERC regulates, but a derivative on electricity is a financial instrument that falls to SEBI, and the overlap became the genesis of a long regulatory conflict.

The resolution came through process and then the courts. The Ministry of Power constituted a committee on 26 October 2018, chaired by an Additional Secretary, with the Department of Economic Affairs, the Central Electricity Authority, CERC, the grid operator, SEBI, the Indian Energy Exchange (IEX), Power Exchange India Limited (PXIL) and MCX, to examine the technical, operational and legal framework for electricity derivatives. The committee submitted its report on 30 October 2019, and the Ministry of Power issued an order on 10 July 2020. The Supreme Court then passed an order dated 6 October 2021, ending the roughly ten-year quandary by disposing of the pending appeals with the consent of both CERC and SEBI and directing the parties to abide by the terms of the Ministry of Power memorandum.

The split the order fixed rests on the SCRA definitions. All ready-delivery contracts and non-transferable specific-delivery (NTSD) contracts in electricity, entered into between members of power exchanges registered under the CERC (Power Market) Regulations, 2010, are regulated by CERC. Commodity derivatives in electricity other than those NTSD contracts fall under SEBI. In plain terms, CERC regulates physical delivery-based forward contracts, while SEBI regulates financial derivatives. Power exchanges like IEX and PXIL handle physical delivery; MCX hosts the financial contract. A joint working group between SEBI and CERC was to be constituted on the agreed terms. The bright-line test is transferability: a financial, exchange-cleared futures contract is SEBI’s, a physical delivery forward on a power exchange is CERC’s.

Why an exchange contract changes power-price hedging

Before the Supreme Court order, hedging power price risk on the exchanges was sharply limited. Trading of electricity through the term-ahead market was capped at a short window, around 11 days ahead, which is too short to manage a generator’s or a discom’s exposure over a season. The order paved the way for longer-duration forward contracts in electricity without that time restraint, and the MCX monthly base-load future is the financial instrument that fills the gap. It allows market participants to buy and sell monthly electricity loads at fixed prices in advance, insulating themselves from spot-price volatility, a fundamental shift away from the long-term PPA model toward market-based contracting.

Who hedges with electricity futures

The contract is designed around three classes of natural hedger, each with an exposure on the opposite side of the power price.

Distribution companies (discoms) buy power to supply their consumers and are exposed to a rise in the spot price. By going long the future, a discom can protect itself against price spikes, fixing its procurement cost for a delivery month rather than being exposed to the day-ahead market. Power generators sit on the other side: a generator can lock in a future selling price by going short the future, securing revenue against a fall in the spot price. Renewable generators have a particular need, because solar and wind output is variable and weather-dependent, so a wind or solar producer can use the future to firm up the price it will realise on the power it expects to sell. Large industrial consumers that buy power directly, the third class, can fix their power cost in advance through the same long position a discom uses. Speculators and arbitrageurs are the fourth participant, providing the liquidity that lets the hedgers find a counterparty, the same role they play in crude oil and gold on MCX.

Cash versus physical settlement

The MCX contract is cash-settled, and this is the feature that keeps it squarely on the SEBI side of the jurisdictional line. No physical power changes hands. The contract settles in cash against a reference electricity price for the base-load delivery period, so a buyer who holds to expiry receives or pays the cash difference between the contract price and the settlement price rather than taking delivery of electricity. A discom that hedges with the future still buys its actual power physically, on the power exchange or under its PPAs; the future settles separately in cash and the two legs offset. This is the structural difference from the CERC-regulated physical forward, where a power-exchange member actually delivers or takes electricity. The cash design is what makes the contract a financial derivative rather than a physical-delivery contract, and therefore SEBI’s to regulate. It also makes the contract accessible to financial participants who have no physical power position at all, which is what supplies liquidity.

Retail availability on Zerodha

Electricity futures are live on MCX and tradable through SEBI-registered brokers in the commodity-derivatives segment. Zerodha covered the launch in its Z-Connect updates and lists MCX commodity futures on Kite , so the contract sits within the same MCX product access a Zerodha client uses for crude, gold and natural gas. A retail trader needs the commodity segment activated and has to meet the contract’s margin, which the launch specifications set at a minimum of 10 per cent or the SPAN-based requirement, whichever is higher, computed through the SPAN margin on Zerodha and exposure margin on Zerodha framework. The contract is new, so liquidity and the bid-ask spread are the practical constraints a retail trader should check on the Kite marketwatch before committing capital, in the way thin liquidity limits the smaller MCX contracts generally. The commodity transaction tax and the F&O taxation in India treatment apply to the electricity contract as they do to other non-agricultural MCX derivatives.

See also

• Multi Commodity Exchange (MCX)
• Multi Commodity Exchange
• National Stock Exchange
• SEBI
• Crude oil futures
• Gold futures
• How to trade crude oil on MCX with Zerodha
• MCX vs international price disparity
• Zerodha MCX trading hours
• Zerodha MCX membership
• Zerodha CDS and MCX product circle
• How to add MCX F&O to the Kite marketwatch
• SPAN margin on Zerodha
• Exposure margin on Zerodha
• SPAN margin
• Commodity Transaction Tax
• F&O taxation in India
• MCX transaction charges and brokers
• MCX extra margins and trade cost
• Futures and options
• Zerodha F&O segment
• Repo rate in India
• Kite by Zerodha
• Zerodha
• Bombay Stock Exchange
• NSE Clearing

External references

• Zerodha Z-Connect: MCX launches electricity futures
• Zerodha Varsity: electricity derivatives
• MCX India
• Central Electricity Regulatory Commission
• SEBI

References

1. Multi Commodity Exchange of India Limited, launch circular for the Electricity Futures (Monthly Base Load) contract, effective 10 July 2025.
2. Supreme Court of India order dated 6 October 2021, disposing of the SEBI-CERC appeals on jurisdiction over electricity forward contracts, on the terms of the Ministry of Power memorandum.
3. Securities Contracts (Regulation) Act, 1956, definitions of ready-delivery and non-transferable specific-delivery contracts; CERC (Power Market) Regulations, 2010.
4. SEBI circular SEBI/HO/CDMRD/DRMP/CIR/P/2020/15 dated 27 January 2020, minimum margin and minimum period of risk for commodity derivatives.
5. Zerodha Z-Connect and Varsity, electricity-derivatives launch and design notes.