Multi Commodity Exchange of India Ltd (MCX) is an independent commodity exchange based in India. India’s largest commodity exchange, MCX has slipped 14 positions in the past two years in the global ranking of exchanges by US–based Futures Industry Association (FIA). As per FIA, MCX slipped to 24th rank among 53 globally-renowned commodity and equity exchanges in 2014, compared with 10th rank in 2012 and 3rd among global commodity exchanges.
The reason behind the fall in global ranking signifies, the imposition of a commodity transaction tax ( CTT) on metals and energy futures contracts and select processed farm futures like sugar, soyabean oil, etc last year, amid lacklustre price movement in commodities like gold and silver and the fallout from the NSEL crisis are behind the poor showing this year, according to multiple industry officials and MCX itself.
“CTT was one of the biggest direct factors that seems to have affected trading on MCX,” said a senior government official aware of the development. “Within a month since its imposition turnover on MCX was down a clean 40 per cent.”
While in 2013, the number of contracts traded on MCX fell by 32 per cent to 26.5 crore from a year-ago period, pushing the bourse to the No. 6 rank from No. 3 in 2012. The number of contracts traded on NCDEX declined by 28 per cent to 3.2 crore, pushing it to the ninth slot from No. 8 position a year ago, data from MCX’s fiscal year 2014 report shows. MCX has cited data from FIA, the leading trade organisation for the futures, options and cleared swaps markets worldwide.
“In 2012, MCX was ranked 10th largest derivatives exchange by FIA in their Global Annual Volume Survey report on 4th exchanges which erroneously clubbed volumes of MCX-SX and MCX. In 2014, the FIA report ranked MCX as the 2largest derivatives exchange. The fall in volume on MCX is attributed to imposition of CTT effective July 1, 2013,” said an MCX spokesperson.
The previous management had laid a vision to get MCX on top in global ranking with an average daily turnover of closed to Rs 100,000 crore in the next few years. The sheen has now gone off commodity markets and the average turnover, the number of brokers and new product launch have taken a hit in the past two years, experts say.