 "Sudden spurt in ICEX, NMCE turnover in March")
Despite a steady decline in overall commodity futures business, small commexes are heading for a big leap in daily average turnover (DAT) in March this year.
The two commodity exchanges comprising less than 2% of market share have witnessed a sharp increase in their turnover in March this year with unusual volumes in otherwise almost illiquid contracts. These exchanges include Reliance ADAG controlled Indian Commodity Exchange (ICEX) and Ahmedabad –based National Multi Commodity Exchange (NMCE).
The daily average turnover (DAT) of ICEX almost doubled to Rs 1,614.74 crore in March (upto 14th) from the level of Rs 716.11 crore in February and Rs 482.99 crore in January this year.
The phenomenal growth in the turnover assumes significance considering the trend in the previous years. Surprisingly, illiquid contracts of the rest of the months in the year suddenly become active towards the end of the financial year resulting into abnormal business on the exchange platform.
This year too, natural gas contract generated a DAT of Rs 210.59 crore in February and over Rs 634.18 crore in March this year as against a negligible turnover during previous months.
Similarly, the DAT of crude oil on ICEX shot up to Rs 224.96 crore in March this year as against Rs 155.79 crore in February and Rs 118.67 crore in January. The same was at Rs 128.11 crore in the corresponding month last year.
“The spurt in turnover could be the consequence of market phenomena. We are monitoring the trade closely to maintain the highest level of surveillance mechanism. Irregularity, if any, is addressed immediately with stringent action,” said Rajnikant Patel, managing director and CEO, ICEX.
Rejecting any possibility of non-genuine trade, Patel said, “We are extremely vigilant for smooth and transparent trade on our platform.”
Similarly, the DAT of NMCE shot up sharply to Rs 1939.25 crore in March from Rs 1694.30 crore in February and Rs 1405.39 crore in January this year.
“We have increased participation during the last few months with registration of a number of new members. Most importantly, the growth is happening from the lower base as the exchange’s turnover fell sharply in the last couple of months. In order to attract participation from genuine traders, we have terminated trading licenses of 72 members who failed to meet the minimum networth criteria of Rs 50 lakh on our platform. Our past efforts have started offering returns now resulting into higher turnover,” said Anil Mishra, managing director of NMCE.
To support genuineness in trade, NMCE has asked members not to square off the entire trade during the day. Hence, its open interest is proportionately increasing. “We have been submitting our report to the FMC on regular basis,” said Mishra.
Similar trend emerged last year as well which forced the market regulator the Forward Markets Commission (FMC) to call for a monthly report and warned traders with intention of tax evasion.
While the DAT of the National Commodity & Derivatives Exchange (NCDEX) in March witnessed a steady growth fairly in sync with previous months, that of Multi Commodity Exchange (MCX) and Ace Derivatives & Commodity Exchange (Ace) declined noticeably because of stringent measures taken by the regulator on regular basis.