Futures trade helps comexes' surpass $1-trillion turnover

Within five years of the launch of futures trading in commodities, the comexes’ annual turnover surpassed $1 trillion benchmark as predicted by intellectuals a year ago.

The three national commodity bourses including the Multi Commodity Exchange (MCX), the National Commodity & Derivatives Exchange (NCDEX) and the National Multi Commodity Exchange (NMCE) recorded a sharp 40 per cent jump in their turnover in 2008.

During the calendar year, the three exchanges, representing over 98 per cent of the commodities’ futures trade in India, witnessed a total turnover of Rs 49.58 lakh crore ($1.02 trillion) as compared to Rs 35.46 lakh crore in the previous year.

The volumes on commodity futures market expected to be higher as futures in four commodities that were banned a year ago are expected to be resumed in a month’s time.

Comexes turnover constitutes about 42.55 per cent of the National Stock Exchange’s derivatives segment turnover which is Rs 116.54 lakh crore. This is significant as experts believe commodities futures’ potential is larger than that of equities.

Leading the roost, the MCX posted a record turnover of Rs 42.56 lakh crore, representing over 85.85 per cent of the total turnover. The exchange which attracts large participation in precious metals, base metals and energy, recorded a total turnover of Rs 27.22 lakh crore in the previous year.

The second largest commodity exchange, NCDEX, posted a total turnover of Rs 62.80 lakh crore in 2008, representing 12.67 per cent of the total annual turnover. The NCDEX with its expertise in agricultural commodities, posted a total turnover of Rs 7.75 lakh crore in 2007.

The third largest commodity exchange with the primary focus on plantation contracts, the NMCE, posted a total turnover of Rs 7.38 lakh crore, representing only 1.5 per cent of total turnover of commodity derivatives in India.

The commodity derivatives trade in India started its humble journey in October 2003 after 40-odd years of suspension. During the period, the exchanges went through suspension in sensitive commodities including potato, rubber, wheat, rice and pulses.

Although, potato and rubber were restored on futures platform while wheat, rice and pulses are expected to be brought back on online futures platform very soon.

With the restoration of these sensitive commodities is in sight, the comexes turnover is likely to reach new highs, said an analyst.

Had the commodities’ futures been given free hand by the government, the turnover would have achieved another milestone in 2008, he added.