MCX launches gasoline contracts

India (MCX), the largest commodity exchange launched gasoline monthly contracts on Wednesday. Being a by-product of petroleum refining, gasoline prices are proportional to crude oil prices across the world. To be settled every month beginning January 2010, contracts are designed to be traded in a lot size of 4,200 US gallons while the maximum order size has been fixed at 420,000 US gallons. Based on the market sentiments, the daily price limit will be 4% on either side in which the exchange may revise up to 6% without observing a cooling period. If the trade hits a price limit of 6%, the daily price limit will be revised further by 3% in any direction after observing a cooling period of five minutes. The price limit beyond 9% will be relaxed after 15 minutes with the approval of the Forward Markets Commission, the commodity markets regulator. Delivery would be ex-Mumbai port based with a total unit of 2.1 million US gallons with a 2% tolerance limit while the exchange has fixed a delivery margin of 25%. (July 2, 2009)