The Iran Mercantile Exchange will unveil futures contracts backed by copper next week, the IME Derivative Market Department announced.
As per a notice on imereport.ir, the first round of copper futures is set for delivery in February. Trade will start on Saturday.
The underlying asset is copper cathode, which is the basic building block for copper production. Cathode is the starting point for processing copper.
Each contract is backed by 100 kilograms cathode and those interested can buy a maximum of 25 contracts in each transaction at a daily price spread ranging from -5% to +5%.
A futures contract is a standardized, legal agreement to buy or sell an asset at a predetermined price at a specified time in the future. At the specified date, the buyer must purchase the asset and the seller must sell it at the agreed-upon price, regardless of the current market price at the expiration date of the contract.
Underlying assets for futures contracts can be commodities–such as crude oil, commodities, agricultural products, or other financial instruments.
Mirfeiz Fallah-Shams, a member of High Council of Securities and Exchange, the capital market’s decision-making body, billed the copper futures as a positive development in the capital market.
“Future contracts help investor’s hedge risk against price movements of underlying assets,” he was quoted as saying.
Founded in 2006, IME trades in agricultural industrial goods plus petrochemicals in the spot and futures markets. The market has launched futures for silver and some agricultural products such as saffron, pistachio and cumin.
Copper cathode is one of the key metals regularly sold in the spot market of the IME. Data has it that the production of copper cathode by the National Iranian Copper Industries Company hit 143,328 tons in the first six months this year. NICICO is a leading copper producer in the Middle East and North Africa and its mines hold and estimated 14% of Asia’s copper deposits and 3% of global reserves.
