Spurt in ICEX, NMCE turnover after Jan

Daily average turnover at ICEX had almost doubled to Rs 1,615 cr till Thursday from Rs 716 cr in Feb and Rs 483 cr in Jan

March has traditionally been a month of spurt in business for commodity exchanges. Despite a steady decline in the overall commodity futures business, two small commexes are heading for a big leap in their daily average turnover (DAT) this month.

There has been a sharp increase in turnover this month, with unusual volumes in otherwise almost illiquid contracts, at the Reliance Group-controlled Indian Commodity Exchange (ICEX) and the Ahmedabad–based National Multi Commodity Exchange (NMCE). These two have only two per cent of the market.

The DAT at the National Commodity & Derivatives Exchange has seen only steady growth in March, fairly in sync with the previous months. Those at the Multi Commodity Exchange and Ace Derivatives & Commodity Exchange have declined noticeably.

The DAT at ICEX had almost doubled to Rs 1,615 crore till Thursday from Rs 716 crore in February and from Rs 483 crore in January. Contracts showing little liquidity in the rest of the months invariably turned active towards the end of the financial year. This year, too, natural gas contracts generated a DAT of Rs 211 crore in February and  Rs 634 crore this month, against a negligible turnover during the previous months. Similarly, the DAT of crude oil on the ICEX shot up to Rs 225 crore in March against Rs 156 crore in February and Rs 119 crore in January. It was Rs 128 crore in the corresponding month last year.

“We are monitoring the trade to maintain the highest level of surveillance. Irregularity, if any, is addressed immediately, with stringent action,” said Rajnikant Patel, managing director of ICEX. Rejecting any possibility of non-genuine trade, he said, “We are extremely vigilant for a smooth and transparent trade on our platform.”

Similarly, the DAT of NMCE shot up to Rs 1,939 crore in March from Rs 1,694 crore in February and Rs 1,405 crore in January. “We have increased the participation during the past few months, with registration of a number of new members. The growth is (also) happening from a lower base, as turnover fell sharply in the last couple of months. To attract participation from genuine traders, we have terminated the licences of 72 members who failed to meet the minimum net worth criteria of Rs 50 lakh on our platform. Our past efforts have started offering returns now, resulting in higher turnover,” said Anil Mishra, managing director of NMCE.

To ensure genuine trade, NMCE has asked members not to square-off the entire trade during the day. Hence, its open interest is proportionately increasing. “We have been submitting our report to the FMC (the regulatory body) on a regular basis,” said Mishra.

A similar trend last year had led to the FMC calling for a monthly report and a warning to traders on any intention of tax evasion.

While the DAT of the National Commodity & Derivatives Exchange (NCDEX) in March witnessed a steady growth fairly in sync with previous months, that of Multi Commodity Exchange (MCX) and Ace Derivatives & Commodity Exchange (Ace) declined noticeably because of stringent measures taken by the regulator on regular basis.