1 Introduction
How India's Multi Commodity Exchange works — contracts, lot sizes, expiry, delivery and price discovery.
Educational purpose only
Concepts and history only — nothing here is a signal, recommendation, target or stop loss.
2 Why this matters
Trading commodity derivatives requires understanding the exchange's specific mechanics — lot sizes, expiry and settlement.
3 Core concepts
7.1 What MCX is
The Multi Commodity Exchange is India's main commodity-derivatives venue, regulated by SEBI, offering futures and options on metals, energy and more.
7.2 Contract specifications
Each contract has a defined lot size, tick size, quotation unit and expiry. For example, gold and crude have specific lot sizes that determine the rupee value of one tick.
7.3 Cash vs. delivery settlement
Some contracts are cash-settled; others can go to physical delivery if held to expiry. Knowing which is which avoids nasty surprises.
7.4 Price discovery
Continuous electronic trading lets many participants discover a fair price; MCX prices also track global benchmarks converted to rupees.
7.5 Margins & timings
Commodity trading has its own margin requirements and longer trading hours (often into the evening), reflecting global market overlap.
4 Visual explanation
An MCX contract is defined by its specification sheet — lot size × price = contract value. Always read the spec before trading.
Illustrative concept diagram.
5 Indian market examples
Gold lot value
Because gold is quoted per 10 grams with a defined lot, a small price move translates to a meaningful rupee change per lot.
Evening session
MCX trades late into the evening to overlap with global metals/energy markets.
Delivery risk
Holding a delivery-settled contract to expiry can obligate physical delivery — a classic beginner trap.
6 Case study
The migration of commodity-derivatives regulation to SEBI (from the former FMC) strengthened oversight and brought commodities under the same robust framework as equities — a good example of how regulation shapes market trust.
Takeaway
Read the contract specification first. Lot size, tick value and settlement type define your real exposure.
7 Interactive exercise
Quick check:
8 Common beginner mistakes
Ignoring the spec sheet
Lot size and tick value define your true risk per contract.
Holding delivery contracts to expiry by accident
You may be obligated to take/make physical delivery.
Underestimating margins
Commodity margins and volatility can be substantial.
9 Pro tips
Match contract to capital
A single lot can carry large notional value.
Know settlement type
Cash vs. delivery changes expiry behaviour.
Mind the hours
Evening sessions track global moves.
10 Summary — key takeaways
- MCX is India's SEBI-regulated commodity-derivatives exchange.
- Contracts are defined by lot size, tick, unit and expiry.
- Settlement may be cash or physical delivery.
- Prices track global benchmarks in rupees.
11 Knowledge check
Answer all, then press Check answers.
12 Practical assignment
Study task (no money involved)
Find the contract specification for MCX Gold or Crude on a broker/MCX site. Note the lot size and tick value. Write one sentence on the rupee value of a one-tick move. Study exercise only.
Educational Purpose Only · No Investment Advice
This lesson is for financial education and awareness only. It contains no buy/sell recommendations, target prices, stop losses or guaranteed returns. Instrument and company names are used purely as real-world illustrations. We are not SEBI registered investment advisers or research analysts. Consult a SEBI registered professional before any investment decision.