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Multi Commodity Exchange of India Ltd.

BSE: 534091 Sector: Others
NSE: MCX ISIN Code: INE745G01035
BSE 00:00 | 27 Sep 1718.35 64.10
(3.87%)
OPEN

1690.65

HIGH

1735.00

LOW

1661.45

NSE 00:00 | 27 Sep 1718.25 58.95
(3.55%)
OPEN

1678.90

HIGH

1730.00

LOW

1661.05

OPEN 1690.65
PREVIOUS CLOSE 1654.25
VOLUME 70524
52-Week high 1875.00
52-Week low 1434.80
P/E 51.32
Mkt Cap.(Rs cr) 8,764
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 1690.65
CLOSE 1654.25
VOLUME 70524
52-Week high 1875.00
52-Week low 1434.80
P/E 51.32
Mkt Cap.(Rs cr) 8,764
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Multi Commodity Exchange of India Ltd. (MCX) - Chairman Speech

Company chairman speech

Dear Shareholders

Since January 2020 in the wake of COVID-19 pandemic uncertainty has been theunderlying feature of the global market. The growth rate of the Indian economy which hadmoderated during the year 2019-20 was expected to improve in the succeeding financialyear. However any expectation/s of a recovery in the current financial year has beenstymied by the global spread of the COVID-19 pandemic and the measures taken to controlit. The stellar performance of MCX during the year 2019-20 should be assessed in thisbackground. The average daily turnover (single-side) of futures trading on MCX grew byabout 26% annually to touch '32424 crore in FY 2019-20. Importantly in the optionssegment the average daily notional turnover increased by about 60% to reach a level of'1126 crore during this period. This performance was reflected in the increased marketshare of the Company which went up to 94.01% in futures trading and nearly 100% in case ofoptions trading during the year 2019-20 in spite of increased competition from domesticexchanges.

The financial results of your Company mirrored its operational performance. During FY2019-20 your Company's total income was '481.77 crore up by 25 % when compared to'384.72 crore during the previous year. As a result profit after tax increased by 53%over the previous year to reach a level of '208.52 crore in FY 2019-20. You would be happyto note that the net profit margin stood at 43%.

Sustaining this performance in near term is a challenging task given the economicslowdown which followed the steps taken both domestically and internationally to controlthe spread of COVID-19 pandemic. Restrictions in trading hours to 5 PM (during March 30 toApril 22 2020) constraints in warehousing and logistics operations inability of brokersto operate with full staff demand compression as industries were subjected to lockdownand erosion of positive sentiment presented and continue to pose a real threat to theCompany's operational performance. To address these difficulties your Company hasintroduced following measures to facilitate uninterrupted trading by members and clients.A dedicated team of employees has been stationed in the Exchange premises and at theDisaster Recovery site respectively to ensure that there is no disruption in trading orclearing. Besides the Exchange has allowed members to operate Trader Work Station (TWS)from anywhere waived TWS User ID charges for upto 5 User IDs developed an online systemfor generating e-passes and relaxed compliance-related timelines. This has in practicematerially reduced the inconvenience faced by stakeholders. We are optimistic that thesemeasures will help the Company address the current challenge meet the expectations of itsstakeholders and maintain its exceptional performance in the future also.

Notwithstanding the uncertainty associated with such a tumultuous period we seeseveral opportunities that can enable your Company to maintain its growth trajectory.During the year 2019-20 MCX launched the MCX India Commodity (MCX iCOMDEX) Indicesadhering to SEBI guidelines and global best practices set by the InternationalOrganization of Securities Commissions (IOSCO). Permission has been received to launchfutures contracts on two indices namely the MCX iCOMDEX Bullion and Base Metal Indices.These are going to be launched shortly. After options with 'commodities' as underlying waspermitted your Company has also launched options on gold and silver thereby expandingits bullion portfolio.

The year 2019-20 witnessed participation of mutual funds in commodity derivativestrade. A large Asset Management Company (AMC) launched India's first mutual fund schemewhich includes exchange-traded commodity derivatives. Other AMCs are expected to launchschemes containing commodity derivatives. We are looking forward to trading by EligibleForeign Entities (EFEs) on your Exchange especially after the European Securities andMarkets Authority (ESMA) granted recognition to MCXCCL as a third country Central CounterParty in December 2019. This will enable European participants to apply lower riskweightage towards their exposures to MCXCCL. EFEs among the European importers of Indiancommodities can thus hedge their exposures in Indian commodity markets on MCX in a costeffective manner.

The year 2019-20 also marked completion of the successful conversion of the settlementtype of the base metal futures contracts from 'Both Options' to 'Compulsory Delivery. TheExchange and its clearing arm facilitated the delivery of 74196 metric tonnes of basemetals during the year. With the launch of deliverable contracts your Company is nowoffering the benefit of a fair price discovery which reflects domestic fundamentals. Thiscould lead to the emergence of a well-accepted reference price in the Indian metalsmarket. In the bullion segment your Company is exploring the possibility of expanding theMCX Good Delivery list to include Indian refineries that meet the criteria set by theExchange. Thus by setting standards facilitating delivery and developing an ecosystemaround commodities the Exchange is making endeavours to set India price benchmarks forsuch commodities in the bullion base metals and agri-commodities segments.

Your Company intends to avail the opportunities that are unfolding whilesimultaneously strengthening its capabilities to withstand and address the unique anddifficult adaptive challenges posed by a wicked problem like the COVID- 19 pandemic. Iwould like to assure the shareholders that the Board and the management is fully committedto take your Company on a sustained growth path to benefit all its stakeholders. As in thepast I seek your continued support to enable us convert the opportunities andcapabilities into tangible outcomes to enable MCX retain its pole position in thecommodity derivatives space and for taking your Company to greater heights of achievement.

Saurabh Chandra
Chairman
(DIN: 02726077)
July 25 2020

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