MCX's global ranking takes a beating

US-based Futures Industry Association places MCX on 24th position for 2014 versus 10th in 2012 owing to steep fall in turnover

The Multi Commodity Exchange of India (MCX), India’s largest commodity exchange, has slipped 14 positions in the past two years in the global ranking of exchanges by US–based Futures Industry Association (FIA).

The findings announced by FIA recently reveal MCX slipped to 24th rank among 53 globally-renowned commodity and equity exchanges in 2014, compared with 10th rank in 2012 and 3rd among global commodity exchanges.

The fall in global ranking signifies MCX has lost a massive turnover and volume in the past two years due to various factors including commodity transaction tax.

“In 2012, MCX was ranked 10th largest derivatives exchange by FIA in their Global Annual Volume Survey report on exchanges which erroneously clubbed volumes of MCX-SX and MCX. In 2014, the FIA report ranked MCX as the 24th largest derivatives exchange. The fall in volume on MCX is attributed to imposition of CTT effective July 1, 2013,” said an MCX spokesperson.

In the past two years, not only MCX but also other commodity exchanges in India have lost volumes and turnover due to the levy of CTT, which was made effective from July 1, 2013. The government levied 0.01 per cent of CTT on processed agri and non-agri commodities.

MCX has lost a massive decline in its trade volume in the past two years. FIA data showed the exchange has cleared 133.75 million contracts in calendar year 2014 - a decline of 49.5 per cent from 264.63 million contracts in the previous year.

The total turnover on MCX reported a fall of 65 per cent to Rs 51.84 lakh crore for FY15 against Rs 148.81 lakh crore in FY13. The total number of trade contracts slumped 60.4 per cent to 148.58 million in FY15 against 375 million two years ago.

Amid the decline in overall volume across all exchanges, the market share of MCX fell a marginal 3.3 per cent to 84.4 per cent in FY15, compared to 87.3 per cent in FY13.

“The fall in global ranking can be attributed to the lack of new launches and stabilizing global commodity prices. At the same time, the top brass and board members continue to reward themselves with fat pay cheques and erode the treasury with futile litigations based on PwC report even as profits dip further” added an industry source.
Follwing the change in management Parveen Kumar Singhal continues to be at the helm of affairs.

Also, the NSEL payment crisis led to selling of FTIL’s stake followed by change in MCX management thereafter. While, the new board and management rejig has made extreme efforts to arrest the fall in the exchange turnover, there has hardly been any success so far.

The previous management had laid a vision to get MCX on top in global ranking with an average daily turnover of closed to Rs 100,000 crore in the next few years. The sheen has now gone off commodity markets and the average turnover, the number of brokers and new product launch have taken a hit in the past two years, experts say.