India’s biggest Commodity exchange, Multi Commodity Exchange, plans to introduce Gold Options just before Diwali between October 5 and 14, soon after getting approval from the market regulator last month.
“We are working for a grand launch after Dussehra and pre-Diwali,” said Mrugank Paranjpe, managing director at MCX Ltd.
The new product will face a lots of hurdles because of the commodities transaction tax regime. This may prevent wider acceptance.
It starts as an options contract and would devolve into a futures contract once executed. The CTT charged at the time of execution could wipe out gains. Traders would prefer to use the options way and square-off ahead of the expiry.
“The regulators are very much aware of the tax assessment for this item, however there is no adjustment in tax collection for this item. There will be practice related STT (securities exchange duty) or CTT on the alternatives that will be connected”, said Paranjpe.
It might bring about a few people needing to square-off, however i think for an item we are beginning this could be one of the viewpoint and may not be the main thing we ought to be stressed over, said Paranjpe
The commodity exchange has planned and organized promotional events and roadshows to push gold options. “We have been meeting individuals and have connected with more than 5,000 Jewelers and diamond merchants,” he included.