MCX sees high average daily turnover of futures

Kolkata: The Multi Commodity Exchange (MCX) of India clocked the highest average daily turnover (ADT) of futures trading of Rs 25,648 crore in 2018-19 since commodity transaction tax was introduced in July 2013 owing to several factors such as the rally in gold prices, RBI not permitting gold hedging on overseas exchanges and bank subsidiaries such as SBI Capital, HDFC Securities and Axis Securities offering commodity derivative products.

Besides, early start and extended trading hours from December 31, 2018, helped increase the ADT, said an MCX spokesperson.

The ADT increased 21 per cent from Rs 21,193 crore in 2017-18.

Among different segments, energy turnover increased 35 per cent, metals’ turnover 18 per cent and bullion turnover 10 per cent.

The spokesperson said that the newly-introduced unique client code in the market post securities intermediation and active participation of bank intermediaries led to an increase in equity fraternity coming into the commodities market.

After the RBI permitted bankowned broking entities to offer distribution services in commodity markets, three bankowned subsidiaries – SBI Capital, Axis Securities and HDFC Securities – started offering commodity derivatives products to their clients. Bank-owned broking subsidiaries have one of the largest networks and physical presence across the country, and often the most number of clients registered with them.

The Indian rupee fell to a new all-time low during the financial year to breach 74-mark against the US dollar. Bullion, energy and metal segments traded on MCX are priced in rupees and all the three segments have a strong correlation with global markets which are priced in US dollars. Hence, sharp volatility in rupee contributed to additional participation in the commodity markets. Higher participation in MCX Gold resulted from the rally in global prices in gold, aided by a volatile rupee.

Future prices breached Rs 34,000 per 10 gram, the highest in the past five years, while open interest jumped to a five and a half year peak during the period. The rupee hitting a historic low and the US Federal Reserve signalling a pause in interest rate hike contributed to rally in gold prices, said the spokesperson.