Ace achieves third slot in commodity futures space
Competition is heating up for acquiring the third place in the Rs 181-trillion commodity futures exchange space.
Within two years of its rebirth as a national commodity trading platform, the Kotak-anchored ACE Derivatives and Commodity Exchange has surpassed its nearest competitors in terms of turnover to become the third largest commodity exchange in India. Ace left behind its two nearest competitors, Ahmedabad-based National Multi Commodity Exchange (NMCE) and the Indiabulls-MMTC promoted Indian Commodity Exchange (ICEX), with a wide margin.
The number one and two in terms of volumes are consistently held by market leader Multi Commodity Exchange (MCX), which has rechristened itself as an exchange for metals and energy and the National Commodities and Derivatives Exchange (NCDEX). Both enjoy market share of 86.33 per cent and 10.62 per cent respectively as on August 31.
While Ace clocked a fortnightly turnover of Rs 7,713 crore during June 16-30, NMCE and ICEX reported an overall business worth Rs 3,789 crore and Rs 2,623 crore, respectively. Since then, Ace continued to outperform and report a turnover accumulative of its two competitors. For the fortnight ending August 31, according to data compiled by the Forward Markets Commission (FMC), Ace reported a turnover of Rs 12,069 crore, compared to Rs 7,856 crore and Rs 4,408 crore by NMCE and ICEX, respectively.
A senior Ace executive preferred not to comment on this achievement amid mounting competition in the sector.
Ace acclaimed as national level commodity trading platform in August 2010 after upgrading a regional exchange–Ahmedabad Commodity Exchange –focusing on agri commodities. The exchange since then focused on specialised commodities and launched soymeal, a product currently not available on any national level exchange and has wide acceptability. Also, the exchange tweaked many delivery centres to make them both production and consumption-centric for best-suited for traders.
“While MCX and NCDEX retain the No 1 and No 2 slots, respectively, for the last several years, the No 3 slot is interchangeable. This is the consequence of market condition and we are doing our best to regain the lost business. We have applied for 11 contracts’ approval with FMC. On getting those approvals, we would get some business back,” said Rajnikant Patel, managing director of ICEX.
Plantation-focused NMCE has been facing its own challenges. “We have analysed the decline in the turnover in the last few months – not really in year-on-year terms – and started working to address the loopholes,” said Anil Mishra, managing director of NMCE.
The development assumes significance as Ace, a new entrant in commodity futures, has left even a decade old player behind. In fact, NMCE was the first exchange granted national level commodity trading platform status in 2003 followed by the other two players— MCX and NCDEX.
Lack of innovations has grappled commodity exchanges in the last two years for which FMC Chairman Ramesh Abhishek also raised concerns. Commodity exchanges are continuing with existing contracts. New contracts either have not been tried or they have been unsuccessful.
Abhishek has on several occasions said exchanges must keep on focusing on innovations for overall growth of commodity futures market. The biggest advantage for Ace is the 200-odd dedicated members of its erstwhile oilseeds-focused Ahmedabad Commodity Exchange, which was a 50-year-old regional commodity exchange. While other exchanges do have membership base, they are facing regulatory or management issues. Overall commodity exchanges’ turnover between June and August shot up 13.74 crore to Rs 855,323 crore during the fortnight ending August 31 from Rs 751,991.84 crore for the fortnight ending June 15.