Multi Commodity Exchange of India Ltd

Multi Commodity Exchange of India Ltd

The Multi Commodity Exchange of India Limited is a deemed Stock Exchange recognized under the Securities Contracts (Regulation) Act 1956; based on value of commodity futures contracts traded. The Company is a demutualized exchange and received permanent recognition from the Government of India on September 26 2003 to facilitate nationwide online trading clearing and settlement operations of commodities derivatives. Multi Commodity Exchange of India Limited was originally incorporated as a Private Limited Company under the Companies on April 19 2002 as Multi Commodity Exchange of India Private Limited. Subsequently the Company converted into a Public Limited Company and consequently the name changed to Multi Commodity Exchange of India Limited on May 16 2002.The Company is an affiliate member of the International Organisation of Securities Commissions (IOSCO) which is an international body that brings together the world's securities regulators and is recognized as the global standard setter for the securities sector. The Exchange is ranked amongst top seven global commodity futures exchanges based on traded volume in commodity futures.MCX commenced online futures trading in November 2003. The company received non-promoter equity participation for the first time in the year 2004 when Bank of India Union Bank and Corporation Bank invested in the Equity Shares of the company. Since then it has received equity participation from various banks and financial institutions including State Bank of India in July 2004 HDFC Bank Limited in March 2005 the NSE in May 2005 and NABARD in June 2005. Fidelity Funds-India Focus Funds (FID Funds (Mauritius) Limited) also invested in equity Shares of the company. MCX offers trading in varied commodity futures contracts across segments including bullion industrial metals energy and agricultural commodities. The Exchange focuses on providing commodity value chain participants with neutral secure and transparent trade mechanisms and formulates quality parameters and trade regulations in conformity with the regulatory framework. The Exchange has an extensive national reach with 709 registered members operating through more than 580000 trading terminals (including CTCL) spanning over 1700 cities and towns across India as at the end of 2015-16. MCX is India's leading commodity derivatives exchange with a market share of 88.8 per cent in terms of the value of commodity futures contracts traded in the quarter ended June 2016.With an aim to seamlessly integrate with the global commodities ecosystem MCX has forged strategic alliances with leading international exchanges such as CME Group London Metal Exchange (LME) Dalian Commodity Exchange (DCE) and Taiwan Futures Exchange (TAIFEX). The Exchange has also tied-up with various trade bodies corporates educational institutions and R&D centres across the country. These alliances enable the Exchange in improving trade practices increasing awareness and facilitating overall improvement of the commodity market. MCX has been certified with three ISO standards ISO 9001:2008 Quality Management System ISO 27001:2013 Information Security Management Standard and ISO 14001:2004 Environment Management Standard. On November 20 2013 MCX signed a Memorandum of Understanding with the China-based Dalian Commodity Exchange to facilitate potential collaboration in knowledge sharing and research between the two large Asian exchanges.The commodity derivatives exchanges which were regulated by the Forward Markets Commission (FMC) under the Ministry of Finance Government of India are consequent upon the merger of FMC with the Securities and Exchange Board of India (SEBI) with effect from 28 September 2015 being regulated by SEBI. Upon the said merger and the consequent repeal of Forward Contracts (Regulation) Act 1952 (FCRA) the Company being a recognised association under FCRA is now deemed to be a recognised stock exchange under the Securities Contracts (Regulation) Act 1956 (SCRA). The rules directions guidelines etc. issued by FMC or the Central Government are to remain in force for a period of one year from 28 September 2015 or till such time as notified by SEBI. Accordingly pursuant to the power vested for regulating stock exchanges SEBI has vide circular dated 26 November 2015 stipulated timelines for commodity derivatives exchanges complying with various provisions of SCRA the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations 2012 (SECC Regulations) and SEBI Circular no. CIR/MRD/ DSA/33/2012 dated 13 December 2012 on `Procedural Norms on Recognition Ownership and Governance for Stock Exchanges and Clearing Corporations' (Procedural Norms). SEBI has allowed time up to one year from 28 September 2015 for commodity exchanges to comply with barring certain requirements as have been notified by SEBI and applicable to stock exchanges.The SECC Regulations inter alia prescribe the eligibility for acquiring or holding shares by stakeholders who need to comply with the fit and proper criteria provided in the SECC Regulations. Further SEBI has vide its circular dated 1 January 2016 issued detailed guidelines for monitoring the shareholdings in listed stock exchanges. The said circular inter alia prescribes modalities to ensure compliance with the provisions of SECC Regulations by the listed stock exchange and depositories. The Company being the only listed stock exchange has implemented the same to the extent possible and for remaining aspects is coordinating with the National Securities Depository Limited Central Depository Services (India) Limited BSE Limited (BSE) the National Stock Exchange of India Limited (NSE) and Karvy Computershare Private Limited the Company's Registrar and Share Transfer Agents.The Company and GIFT SEZ Limited a wholly owned subsidiary of Gujarat International Finance Tec-City Company Limited (GIFTCL) at GIFT City Gandhinagar signed a MOU in August 2015 for setting up of an International Exchange that will provide an electronic platform for facilitating trading clearing and settlement of securities commodities interest rates currencies other classes of assets and derivatives to international investors in GIFT SEZ-IFSC. The Company would take further steps to set up the said international exchange once the regulatory guidelines and other policies of the government are issued for entities to be set up at the GIFT City.In April 2016 an addendum was signed to the existing MOU between the Company and China-based Dalian Commodity Exchange to extend strategic co-operation.During the year 2016 the Company has signed MOUs with eight educational universities and institutions - Amity Business School (Uttar Pradesh) Banasthali University (Rajasthan) Chitkara University (Punjab) Christ University (Karnataka) ITM Group of Institutions (Maharashtra) KIITS School of Rural Management (Odisha) Kredent Eduedge (West Bengal) and N. L. Dalmia Institute of Management Studies and Research (Maharashtra) thereby re-emphasizing its commitment toward financial literacy in commodity derivatives and its endeavour in reaching out to a larger number of market participants.During the year 2017 the Company commenced futures trading in Castor Seed. With the launch of new contract the Company expanded the existing basket of agricultural products being traded on its platform. Further the Exchange introduced a facility of disseminating cotton prices in Candy in order to cater to participants who want information of cotton prices in Candy. The Exchange made upward revision in its fee charged to members with effect from 1 October 2016.Pursuant to the Consent Terms between the Company and Metropolitan Stock Exchange of India Ltd. (MSEI) filed with and taken on record by the Hon'ble Bombay High Court the Company has since received necessary approval and no objection from SEBI for conversion of warrants of MSEI into its Equity Shares. Accordingly the Company vide its letter dated 29 September 2016 to MSEI has exercised the conversion right of 265177600 warrants issued as per the Scheme of Reduction cum Arrangement into 265177600 Equity shares of Rs1 each. The Equity shares have since been allotted and credited to demat account of the Company on 3 October 2016. As per the consent terms an amount of 150740072/- has been received on 14 October 2016 towards balance 150740072 warrants.During the year 2017 the Company signed a Memorandum of Understanding (MoU) with Singapore Diamond Investment Exchange (SDiX) the world's first and only commodity exchange trading in physically settled diamonds for cooperation in areas such as knowledge sharing and research standardization of product for Indian markets and enhancing transparency in pricing. The exchanges through this MoU also have agreed to work towards assisting stakeholders in India's diamond industry by introducing international best practices in price risk management and price discovery through innovative spot and derivative market operations. The move will also foster sharing of information between the exchanges.During the year under review as part of its commitment toward financial literacy in commodity derivatives and endeavour to reach out to a larger number of market participants the Company signed MoUs with 11 educational universities and institutions. The 11 educational institutions are - Mandsaur University (Madhya Pradesh) Marwari University (Gujarat) Vinobha Bhave University (Jharkhand) Lal Bahadur Shastri Institute of Management (Delhi) Navitas Resources Pte. Ltd. (Singapore) Imaticus Learning Pvt. Ltd. (Maharashtra) Loyola Institute of Business Administration (Tamil Nadu) EduedgePro Pvt. Ltd. (Maharashtra) Symbiosis Centre for Management & Human Resource Development (Maharashtra) Gnanam Business School (Tamil Nadu) and Pondicherry University (Pondicherry). Pursuant to these MoUs Awareness Programmes and Classroom Sessions on Commodity Derivatives were organised with some of these institutions for their students and faculty.During 2016-17 the company signed a MoU with The Institute of Companies Secretaries of India (ICSI) to jointly conduct interactive sessions faculty development programmes research conferences and other activities with the objective of achieving knowledge creation and spreading awareness about the benefits of commodity price risk management. Similarly the Company signed an agreement with Indira Gandhi Institute of Development Research (IGIDR) to support and undertake research on contemporary issues of relevance in India's commodity derivatives market.During the year 2018 the Exchange joined hands with Confederation of Indian Textile Industry (CITI) and Northern India Textiles Mills' Association (NITMA) to engage in various education initiatives with their members and other relevant stakeholders of the industry. Further the Company signed a Memorandum of Understanding (MOU) with Mahindra Agri Solutions Ltd. a wholly owned subsidiary of Mahindra and Mahindra to provide agriculture related price information. During FY2018 in terms of the stock selection criteria prescribed by SEBI National Stock Exchange of India Limited (NSE) introduced trading on Futures & Options contracts on the securities of MCX with effect from 28 April 2017. SEBI (Stock Brokers and Sub - brokers) Regulations 1992 was amended thereby integrating the broking activities in Equity Markets and Commodity Derivatives Markets under single entity. The Product Design and Risk Management Framework for Options on Commodity Futures was issued on 13 June 2017. It provides for the eligibility criteria for selection of underlying commodity futures for options and the product design for options on commodity futures. The Reserve Bank of India (RBI) permitted Banks to become Professional Clearing Member (PCM) at Commodity Derivatives Exchanges to offer clearing & settlement services to the trading members/clients of the Exchange. It also permitted Bank subsidiaries to offer broking services in commodity derivatives segment.During 2017-18 the Company commenced trading in options on gold futures in mid-October a momentous landmark in the history of the Indian commodity derivatives market as it is expected to usher in a new era in price risk management for various stakeholders.MCX in association with Thomson Reuters launched Thomson Reuters-MCX India Commodity Indices (iCOMDEX) on 26 September 2017. The Exchange shall be able to launch derivative contracts on such indices at an opportune time once SEBI approves derivatives on intangibles including commodity indices. Another major initiative taken during the year was the commencement of trading in Brass Futures contract on 26 March 2018 marking the first time that a Brass Futures contract was traded on an organised exchange anywhere in the world. The Exchange also launched futures contracts on Black Pepper and RBD Palmolein during the year.In May 2018 the Company received approval from SEBI for launching options in four more commodities - Crude Oil Copper Silver and Zinc - which have also been made available for trading. Company received approval from SEBI for launching options in four more commodities - Crude Oil Copper Silver and Zinc - which have also been made available for trading.Pursuant to SEBI approval to the Company's wholly owned subsidiary Multi Commodity Exchange Clearing Corporation Limited (MCXCCL) a wholly-owned subsidiary of Company was set up as a separate clearing house to provide services such as clearing and settlement of trades and thereafter it commenced operations w.e.f. September 03 2018.The Company signed an agreement with Central Depository Services Limited (CDSL) and CDSL Commodity Repository Ltd. (CCRL) effective May 18 2018 for setting up and operationalization of the new repository and CCRL became an associate company of MCX w.e.f. June 04 2018 through acquisition of 24% stake.During the year 2019-20 MCX launched the MCX India Commodity (MCX iCOMDEX) Indices. During the year 2019-20 Company launched options trading with Crude Oil (100 Barrels) Zinc (5MT) Silver (30 kg) and Copper (1 MT) futures as underlying. On March 26 2018 MCX had launched Liquidity Enhancement Scheme (LES) in Gold options from April 24 2018 for a period of six months i.e. upto October 23 2018 to provide two-way quotes for three price levels and five strike prices of both call and put in MCX Gold Option contracts.During FY 2019 the modified futures contracts from `Both Options'settlement mode to `Delivery-Based' settlement mode for Aluminium Aluminium Mini Zinc Zinc Mini Lead and Nickel were approved and launched. The Company completed settlement of its first delivery based Aluminium Futures Contract with delivery of 10 MT on March 29 2019.During the year 2019-20 MCX signed a Memorandum of Understanding (MOU) with Government of Maharashtra and launched `Cotton Mission' to empower cotton farmers in Vidarbha region and create a value chain with final market linkages. It signed MoUs with Indian Cotton Federation (ICF) for knowledge-sharing initiatives and Indian Bullion and Jewellers Association (IBJA) to set up the Bullion Spot Exchange for Bullion stakeholders.During the year 2019-20 SME Exchange of India Limited a subsidiary of Company which was set up to provide a platform for transacting clearing and settlement of trades in small and medium enterprises segment has been voluntary liquidated vide Hon'ble High Court Bombay Order dated August 30 2019.As at March 31 2019 MCXCCL has entered into agreements with four WSPs for facilitating physical deliveries in agricultural commodities and Base Metals viz. Origo Commodities India Private Limited Yamada Logistics Private Limited Navjyoti Commodity Management Services Limited and Shree Shubham Logistics Limited. It accredited 55 warehouses of these four WSPs of which 52 warehouses were registered with the Warehousing Development & Regulatory Authority (WDRA) and remaining 3 warehouses for metals do not require WDRA registration. It entered into agreements with Sequel Logistics Private Limited Brinks India Private Limited & Malca-Amit JK Logistics Pvt. Ltd. as `Vault Service Providers' for facilitating physical deliveries in bullion.In August 2020 the Company launched Futures contracts on MCX iCOMDEX Bullion Index (BULLDEX) and Base Metal Index (METLDEX). In addition it launched the Rubber Futures contract during financial year 2020-21. It launched a new commodity in the Agriculture basket i.e. Rubber contract (1 MT) on December 28 2020. As at March 31 2020 MCXCCL has accredited 46 warehouses of these seven WSPs of which 40 warehouses are registered with the Warehousing Development & Regulatory Authority (WDRA). Further MCXCCL entered into agreements with Sequel Logistics Private Limited Brinks India Private Limited & Malca-Amit JK Logistics Pvt. Ltd. as `Vault Service Providers' for facilitating physical deliveries in bullion.In FY 2022 MCX has forged strategic alliances with leading international exchanges such as CME Group and London Metal Exchange (LME). The Exchange signed Memorandum of Understanding (MoUs) with renowned global exchanges viz. Dalian Commodity Exchange (DCE) Taiwan Futures Exchange (TAIFEX) Zhengzhou Commodity Exchange (ZCE) and European Energy Exchange AG (EEX) to facilitate cooperation in areas of sharing knowledge and expertise education & training etc. In April `22 Company signed a consultancy agreement with Chittagong Stock Exchange Limited (CSE) for setting up the first commodity derivatives platform of Bangladesh. Two domestic Refined Lead producers namely; Pilot Industries Ltd and Gravita India Ltd were empanelled as MCX approved brands during the FY 2021-22. In all 81499 MTs of base metals were delivered via the Exchange settlement in FY 2021-22.During FY 2021-22 the Exchange launched futures on its third sectoral index i.e. MCX iCOMDEX Energy (ENRGDEX) in October 2021.As on 31st March 2022 the Company has a national reach with 592 members having 50254 Authorised Persons operating through several terminals connected through various available modes of connectivity (including Computer to Computer Link (CTCL) Internet Based Trading and Wireless Trading) across 1018 cities/towns across India. 8 bank (broking) subsidiaries were registered with the Exchange.During the year 2021-22 the Exchange launched futures contracts in MCX iCOMDEX Energy Index (MCX ENRGDEX) as well as Options on Futures of Silver Mini Nickel and Natural Gas.In 2022-23 the Exchange launched mini futures contracts in Base Metals (Aluminium Zinc and Lead) Crude Oil and Natural Gas as well as Options on Gold Mini during the year FY 2022-23. The crude oil mini futures were launched on 03rd March 2023 and natural gas mini futures on 14th March 2023. MCX launched Gold Mini Options with Gold Mini (100 gram) Futures as underlying on 25th April 2022. 1 MT contracts of Aluminium Lead and Zinc were launched during the FY 2022-23.