Commodity derivatives volumes at seven-year low

THE DOWNFALL
Volumes on commodity exchanges have nosedived in the past few years, especially after the government imposed commodities transaction tax on commodities derivatives (July 2013). This has pushed many jobbers and liquidity providers out of the market

MARKET SHARE
The fall in the prices of several commodities has contributed to the fall in volumes. In the past six years, while overall volumes have fallen compared to FY09, MCX and NCDEX volumes are higher. But current NCDEX volumes show much higher growth than in FY09. Of late, MCX has regained its market share

CURRENT STATE
In the first half of FY15, the market share of the agro-centric NCDEX was 16.98 per cent, which fell to 12.41 per cent in second half. During that period, the share of MCX rose from 81.35 per cent to 86.10. In March this year, MCX’s market share stood at to 88.84 per cent

Jayant Manglik, president of retail sales at Religare Securities, says, “In the past few quarters, MCX has increased market share from less than 80 per cent to 89 per cent, owing to the efforts of the current management, lead by P K Singhal, who has increased communication with members and undertaken several joint awareness programmes to bring new clients to commodities”

NCDEX lost share because of the falling prices of agro commodities, as well as some regulatory action

THE ROAD AHEAD
The government has proposed a merger of the Forward Markets Commission with the Securities and Exchange Board of India. This will lead to the introduction of new products and a new class of investors, which will potentially bring back lost volumes. Currently, there are six exchanges, of which two aren’t functional. Consolidation in the exchange space is likely, as BSE is also entering