InvestorQ : Can you tell me about the METLDEX index that started trading on the MCX from 19 October?
vidhya Laxmi made post

Can you tell me about the METLDEX index that started trading on the MCX from 19 October?

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sarah Leo answered.
1 month ago
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On Monday, 19 October, the Multi Commodity Exchange or MCX formally launched trading in the Base Metals Index 'METLDEX' on October 19. It may be recollected that this is the second tradable index from MCX after BULLDEX, a combination of gold and silver.

The need for indices was really felt after the oil price crash on oil contract settlement day on April 20 this year. That day, WTI crude closed in the negative and that resulted in huge losses. It was then felt that a diversified index would reduce risk for traders.

The Base Metals Index, METLDEX, will track the real-time performance of a basket of near-month base metals futures that are traded actively on the MCX. Since it will be a portfolio of base industrial metals, it will not be vulnerable to movements in any one metal.

In the METLDEX, zinc carries a weightage of 33.06%, copper 29.81%, nickel 14.77% and lead 12.88% and aluminium 9.48%. All these are industrial metals which go into industrial use and are also a lead indicator of pick up in industrial activity.

This index offers easy portfolio diversification for traders, users and manufacturers and allows traders to take a view. These contracts will be mandatorily cash settled and like the Nifty, it is expected to drive volumes in a big way.

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