'Commodity market needs more teeth'

In the commodity market speculation plays a major role and more controls need to be put in place, opined Tarun Shah, CEO, Sharekhan.

Speaking to Business Standard during the launch of Ahmedabad branch, 108th in the country, Tarun Shah said, "We are waiting for the commodity market to mature and suitable for retail investors."

The volumes of commodity trading, according to Shah, are controlled by a few players; and often leads wrong conclusions. When asked about the Centre's move to keep away certain essential commodities from the purview of trading, Shah said, "If there is a misuse, the government is right in proposing a ban."

Commodity derivatives command a humble share of 6 per cent in the world derivatives segment. Yet they record high volumes in the market compared with equity derivatives.

Though the Forward Markets Commission has been active for years, it is only three years since the three national exchanges came into being, he noted, and said, "In terms of volumes the commodity market took over the equity market in India months ago. However, it will take time to guide retail investors to invest in it."

Sharekhan is on an expansion spree and aims at opening 200 branches in two years. "Of these, 50 branches will be set up this year ," he said. The company deals with a volume turnover of Rs 1,200- 2,500 crore on a daily basis and has 400 partners.

In April, the share broking firm had said that the global private equity firm, General Atlantic LLC, would invest Rs 144 crore in it.

The investment will be a combination of primary investment in the company and secondary investment to buy the entire shareholdings of First Carlyle Ventures - the Carlyle group.

Sharekhan will use the proceeds to fund the company's strategic initiatives, Shah said, adding infrastructure and new branches would be the main focus.