The flexibility to fix transaction charges has sparked a fight among the commodities futures exchanges to grab market share, a majority held by the Multi Commodity Exchange (MCX).
The exchanges have started working on reducing the charges on non-agricultural commodities contracts like metals and energy’s that are cash settled and non-deliverable. Most important, these are 86 per cent of the accumulative turnover of all exchanges. The MCX accounts for 90 per cent of the turnover in this segment.
The commodities derivatives markets regulator, Forward Markets Commission, on February 13 allowed different transaction fees on metals and energy’s contracts. The FMC is understood to have asked exchanges to implement reduced charges for incremental volumes.
Also, the difference between the higher and lower slab should not be 50 per cent more than the lower one. Samir Shah, managing director and chief executive officer (CEO), National Commodity and Derivatives Exchange (NCDEX), said, “We are reviewing our turnover charges further and will be formulating plans soon.”
“Most competition would be between the MCX and NCDEX,” said Ashok Mittal, CEO, Emkay Commotrade. Smaller ones like Ace Derivatives and Commodity Exchange, anchored by the Kotak group, are preparing to be competitive. “We will follow the competition according to a suitable time,” said Dilip Bhatia, CEO of Ace. An email to the MCX remained unanswered.
The NCDEX, National Multi Commodity Exchange, Ace, Indian Commodity Exchange and Universal Commodity Exchanges have introduced many contracts in non-deliverables but have not succeeded in attracting participation.