MCX's market share up on volatility in non-agri space

Market share up by 5 percentage points in first 2 months of FY14 on aggressive traders' participation in non-agri commodities

Multi Commodity Exchange’s (MCX) market share rose by five percentage points in the first two months of this financial year, owing to aggressive participation by traders in the non-agricultural space, on higher volatility. The exchange’s market share rose to 90.11 per cent, with a record turnover of Rs 25,45,427.94 crore during April-May, against Rs 23,13,925.76 crore in the corresponding period last year.

In April-May, MCX recorded 10 per cent growth in its overall turnover, as traders hedged their positions due to volatile non-agricultural commodity prices. “Extreme volatility in the non-agri commodities space was the major contributor to the rise in MCX’s turnover. At the same time, prices of agri commodities remained subdued, resulting in lower business on other exchanges,” said Naveen Mathur, associate director, Angel Broking.

MCX’s gain was a loss for other exchanges. National Commodity & Derivatives Exchange (NCDEX) saw a sharp fall in its market share in April and May---from a share of 10.41 per cent in the commodity futures turnover in April-May 2012, its market share slid to 6.86 per cent in April-May this year. The cumulative business of the commodity exchanges stood at Rs 28,24,658.79 crore.

NCDEX recorded an overall turnover of Rs 1,93,651.66 crore in April-May, compared with Rs 2,81,917.40 crore in the year-ago period.

With the onset of the southwest monsoon, volatility in agri commodities was likely to remain high in the coming months, and this would drive NCDEX’s business in the near term, said Mathur.

Kishore Narne, associate director, Motilal Oswal, said, “A year ago, a few commodities, including guar and pepper, contributed significantly to the NCDEX turnover. Despite the re-listing of guar, the turnover continues to remain low in this segment. Also, pepper is yet to see the light of the day on national exchanges and most agricultural commodity prices declined sharply last year.”

Market shares of other exchanges, too, fell in the April-May period. From 2.01 per cent in April-May 2012, the Ahmedabad-headquartered National Multi Commodity Exchange’s market share fell to 1.76 per cent. Reliance Group-controlled Indian Commodity Exchange also recorded a fall in its market share---from 1.27 per cent to 0.83 per cent. The market share of Kotak-anchored Ace Derivatives & Commodity Exchange fell from 0.86 per cent to 0.44 per cent. Its turnover fell to Rs 12,438.46 crore from Rs 23,312.03 crore in April-May 2012. With the onset of the southwest monsoon, volatility in agri commodities was likely to remain high in the coming months, and this would drive NCDEX’s business in the near term, said Mathur.

Meanwhile, market share of other exchanges also fell in April – May period. From the level of 2.01% with a turnover of Rs 54373.26 crore, the Ahmedabad – headquartered National Multi Commodity Exchange (NMCE) witnessed a sharp fall in its overall contribution to commodity futures business to 1.76% at an accumulative turnover of Rs 49610.74 crore in the same period this year.

Reliance ADAG Group controlled Indian Commodity Exchange (ICEX) also witnessed a fall in its market share from 1.27% (Rs 34372.34 crore) in April – May 2012 to Rs 0.83% (Rs 23529.99 crore) in the corresponding period this year.

With a staggering 47% decline in turnover, the market share of Kotak anchored Ace Derivatives & Commodity Exchange (Ace) fell from 0.86% to 0.44% in the first two months of the current financial year.

Between April – May 2013, the turnover of Ace fell to Rs 12438.46 crore from the level of Rs 23312.03 crore in the corresponding period last year.