Mini bourses plan mega merger to hit MCX, NCDEX

Bombay exchange takes initiative by setting up forum

Aimed at facilitating trading in more commodities, the Bombay Commodity Exchange Ltd (BCE) has initiated steps to consolidate regional exchanges.

The consolidated entity is expected to give major exchanges such as the Multi Commodity Exchange of India (MCX) and National Commodity and Derivatives Exchange (Ncdex) a run for their money.

Despite starting a trading platform much later, these national exchanges have been successful in launching derivative products in a number of agri-commodities irrespective of their traded volumes.

"We have already formed a body, the Federation of Indian Commodity Exchanges, in association with a number of regional exchanges, including Ahmedabad Commodity Exchange Ltd (ACE), Surenranagar Cotton Oil & Oilseed Oilseeds Association Ltd (SCCOA) and the Spices and Oilseeds Exchange Ltd (SOE). We are also in talks with other regional exchanges to join hands for creating a better trading platform," P M Chheda, president, BCE, said.

"MCX and Ncdex trade in a number of oil and seeds but except for soyoil none of them are doing well. Initially, trading volume in these commodities was higher due to the extended trading hours up to 11 pm. Once the extension was revoked, the oilseeds volume dipped dramatically," said Chedda.

There are 538 registered members with BCE. MCX and Ncdex enjoy business with 900 and 624 members, respectively. ACE, SCCOA and SOE have 214, 90 and 85 members, respectively.

Regional exchanges, especially that of Indore, took a while before gaining market share. Though some members from BCE had taken membership in these bourses initially, big players were hesitant in taking part majorly. This is the reason for the higher castorseed and palmolein trading volumes at BCE, Chedda said.

On volume growth, Chheda said traders from all over the country have started taking part in trading whereas earlier traders from limited areas participated. However, online trade has not yet picked up yet, he said.

On the compulsory registration with the Forward Markets Commission (FMC) by October 31, Chheda said FMC can not change the Forward Contracts (Regulation) Act of 1952 and all changes are to be published in the government gazette. The markets regulator has said that traders who do not meet the deadline would not be allowed to trade in India.

However, BCE is yet to receive any notice to this effect, Chedda said.

"Our members approach us if they face any problem. We help them sort out the issues," Chheda added.

"BCE provides arbitration or consideration to buyers in consultation with sellers and the matter gets resolved," he said.

However, he did not provide any time-frame for consolidation. We have already initiated talks with the Bombay Stock Exchange and they are ready with the technology," he said.