Can you throw some light on the new indices launched by MCX and how they can be used by the traders and investors?

Thomson Reuters and Multi Commodity Exchange of India (MCX) have announced the launch of their co-branded commodity index series, Thomson Reuters-MCX India Commodity Indices (iCOMDEX), tracking the performance of commodities listed on MCX. The index methodology is similar to other established commodity indices used by international investors, such as the popular CRB index; which is a global benchmark.

There will be one composite index consisting of 11 commodities; sector indices for bullion and base metals and individual commodity indices for gold, copper and crude oil. These indices have been designed to be tracked by derivatives and exchange traded funds, to allow investors to monetize their view on the commodity with only systematic risk and reducing unsystematic risk in the trade to the bare minimum. Thomson Reuters will calculate and administer the indices, which track the commodity futures prices traded on MCX, while MCX will be advising Thomson Reuters on index methodology and ensuring that it best meets the needs of Indian investors.

In short, Thomson Reuters will bring in its best-in-class global domain expertise and skills while MCX will bring to the table its local knowledge and understanding of commodity trading in futures and options. It will be a systematic trading tool and also a hedging tool for traders and investors. Over time, beta hedging methodologies can also be developed by the traders and the investors.