According to a press release issued by Crisil, MCX is expected to maintain its dominant position in the commodities market, backed by product innovation and strong technological capabilities. The exchange accounts for 77 per cent of the traded volumes on all commodities exchanges across the country.
The MCX has focused on commodities benchmarked to international prices such as bullion, energy and metals as these have high liquidity and low impact costs.
Moreover, MCX should be able to retain its competitive advantage, thanks to strong technological capabilities and association with Financial Technologies. MCX's profitability and return indicators have been strong in the past four years. Growth is likely to moderate in the short term due to the impact of the commodity transaction tax. However, MCX's strong market position and continuous focus on product innovation would act as growth drivers.
In the long term, growth could be spurred by the introduction of new instruments such as options and the participation of institutional players including banks, mutual funds and FIIs once the necessary regulatory changes are in place.