Covid effect: Daily turnover on MCX tanks 73% as bourse cuts timings

The average daily turnover (ADT) on MCX, which offers the country’s biggest commodity segment, has plunged 73% since trade timings were cut from March 30. The exchange in light of the Covid-induced national lockdown has cut the trade timings like other exchanges to protect its employees.

ADT shrank to Rs 10,749 crore during March 30-April 13 from ADT of Rs 39,391 crore in the calendar year through March 27 after stock exchanges reduced trade timings to 9 am - 5 pm from 9 am-11:30 pm .

A chunk of trading on MCX begins post 5 pm when International exchanges like CME group’s Comex , Nymex and LME open. Base metals , energy and precious metals prices fluctuate during the evening hours . MCX contracts take pricing cues from the international contracts traded on these exchanges. MCX prices are in rupees and so offer an ideal trading platform for hedgers in, say, gold , silver and base metals , say Broking officials .


The bourse also attracts speculators who take on the risk that hedgers seek to insulate themselves from . A bourse gets liquidity through a mix of hedgers and informed speculators .

The other reason for the fall in volumes is the increased margins following high volatility in commodities like crude and gold in the recent past, said Nitin Kedia , director , Kedia Capital . Crude gapped down by 30% weeks ago, leading to brokers cutting positions of Long clients who couldn’t top up the margins .

One of the main revenue stream of exchanges is transaction charges . The more the transactions the greater the transaction fees . In Q3 FY20 , MCX posted a net profit of Rs 48.4 crore , up from Rs 38 crore a year ago . Income from operations grew to Rs 88.27 crore from Rs 76.17 crore . The stock has since the restricted timing remained flat at Rs 1,034 apiece.