About Indian Gas Exchange Ltd.
Indian Gas Exchange Ltd. (IGX) is India’s first automated national level Gas Exchange to promote and sustain an efficient and robust Gas market and to foster gas trading in the country. The exchange features multiple buyers and sellers to trade in spot and forward contracts at designated physical hubs. IGX is a neutral and transparent market place where both buyers and sellers trade Gas as the underlying commodity. The contracts traded at Exchange are for compulsory specific physical delivery and settlement of the trade are subject to the condition that such contracts are non-transferable in nature and without any netting-off thereby. IGX enables efficient and competitive discovery of gas prices and one of its most important objectives is also to maintain market integrity.
IGX started operations on 15th June 2020 as Gas Trading Platform and has been operating as the Gas Exchange since 10th December 2020. The Exchange operates under the regulatory framework of Petroleum and Natural Gas Regulatory Board (PNGRB).
The Government of India has set a policy target of increasing the share of natural gas in India’s energy basket from current 6.5% to 15% by 2030. World average proportion of gas in the energy mix is currently at 23.5%. To undertake such an increase in share of natural gas in India, it is imperative to drive investments in the overall gas economy value chain – including domestic production, re-gasification of imported LNG, transportation (pipelines) and end-use consumption (industrial, commercial and residential applications). The required investments, in turn, calls for a market-based mechanism for gas pricing and allocation that can generate effective price, demand and supply signals. A market-based mechanism is possible if there is a transparent and neutral natural Exchange.
Additionally, the Gas Exchange will also drive competition across the value-chain, leading to innovative business models and efficient cost-structures, thus supporting the overall affordability of gas.
Secure and Scalable Technology
IGX technology platform provides rapid, accurate, secure and efficient trade catering to the requirements of pre-and post-trade functionalities with the capability to handle complex orders. The web-based platform is highly user-friendly and is accessible online and has high sociability to enable the addition of new products and functions efficiently.
The bidding is done in an anonymous manner, where the buyer and seller do not know their counterpart.
Efficient Price Discovery
The price discovery will be either through double-sided closed auction with uniform price mechanism or through Continuous trade mechanisms. In Double-sided closed auction, the participants will input their bids to buy/sell at a specific price point. The market will determine one single uniform market clearing price. In continuous trade, the price will be matched based on bids and offers in continuous session.
Various types of contracts such as Day-Ahead, Daily, Weekdays, Weekly, Fortnightly and Monthly for buyers and sellers provide flexibility to participants to trade for a period from one day up to one month. There may also be customized auctions for participants going forward.
The bids are monitored securely to ensure the highest integrity and efficacy of the marketplace. The platform provides counterpart guarantee in terms of fund obligation to its members. A Member or the Client, as applicable, can transact only when it maintains the minimum requisite margins as specified under different contracts.
IGX is a neutral and transparent trading platform. It provides Standard contracts for its Members to trade. The price discovered through the platform is transparent in nature. The Market Rules and Bye laws of IGX documents the day to day operations and the rights and obligations of the trading platform and its Members to abide by. All Members and Clients trading are well informed entities.
Clearing & Settlement
Clearing is the process of determining the financial and delivery obligations of participants, while the discharge of such obligations is referred to as a settlement.
Participants on the platform will get their financial and delivery-based Obligations details periodically. Such Obligations will have to be settled by the participants as per the settlement calendar of IGX. All the contracts will be available at active hubs identified and we offer following delivery options:
- Delivered transactions: IGX books the capacity after the trade. It acts as a shipper and settles imbalances with the pipeline operators and collects relevant imbalance charges from seller/buyer.
- Ex-hub transactions: The buyer acts as shipper and books the capacity and manages all settlements relating to pipeline access and capacity.