MCX volume, market share inching up

Yesterday, MCX market share went up to 90.1% and its turnover stood at Rs 31,129 crore

Market share of the Multi Commodity Exchange (MCX) has started to rise, following revived confidence of entities after Kotak Mahindra Bank (KMB) acquired 15 per cent stake in it.

Market share rose to 86.25 per cent in the first half of this month. On Thursday, it went up to 90.1 per cent and turnover was Rs 31,129 crore. In September, the share was 82.7 per cent and that of National Commodity & Derivatives Exchange (NCDEX) was 15.5 per cent. In December, the MCX market share was at a low of 76.6 per cent. Last year in September, MCX was at 82.2 per cent and NCDEX at 13.5 per cent

Entry of Kotak and exit of erstwhile promoter Financial Technolgies (FTIL) was an important development, as was its supervision from May 10 by a board-appointed panel, plus a clear operational head. More important, after exit of FTIL, the Forward Markets Commission approved all its futures contracts, which it had held up till then, giving rollover facilities to traders. MCX volumes were falling after imposition of a commodities transaction tax from July 2013 and then the impact of the National Spot Exchange payments scam. NCDEX had seen its market share rise to 18 per cent in July from 11 per cent in the corresponding period last year.

Daily average turnover on MCX rose in the first half of October by 41.5 per cent to Rs 31,129 crore. And, the prices of metals, bullion and energy saw a lot of recent volatility, resulting in higher volumes on the exchange.

“After the new promoter came in and with MCX receiving permission to launch contracts for next year, the confidence among traders had increased. Also, due to volatility in energy, bullion and base metals prices, open interest (contracts not squared off at day's end) has increased,” said Viral Shah, head of institutional business at Geojit Comtrade.