Commodity turnover up 20 per cent in FY19

Chennai: Commodity exchange turnover grew around 20 per cent in FY19, the highest yearly turnover since the introduction of commodity transaction tax in 2013.

The combined turnover of Multi Commodity Exchange (MCX), National Commodity and Derivatives Exchange (NCDEX) and Indian Commodity Exchange (ICEX) touched Rs 71 lakh crore in FY19 against Rs 59 lakh crore in FY18, registering a growth of around 20 per cent.  In FY18, the turnover of the exchanges was down by around 7 per cent.

The FY19 turnover is the highest since the commodity transaction tax was introduced in 2013. In FY12, the annual turnover of commodity exchanges had touched Rs. 181.26 lakh crore in 2011-12 and after the introduction of CTT and the NSEL fiasco, the annual turnover of the exchanges made a steady drop in FY13 and stabilised around Rs 60 lakh crore by 2014-15. Turnover had remained largely stagnant around these levels in the subsequent years.

In FY19, MCX registered 22.45 per cent growth in turnover at Rs 65,91,428 crore against Rs 59,72,333 crore in FY18. Though the turnover remained stagnant in the first half of the year, it started picking up since September due to a few supporting factors.

The growth largely came from energy and metal contracts, which witnessed higher levels of volatility. Sharp volatility in rupee also contributed to additional participation.

Trade timings were extended in the second half of the year and bank-owned broking entities were allowed to offer distribution services in commodity markets. Three bank-owned subsidiaries - SBI Capital, Axis Securities and HDFC Securities - started offering commodity derivatives products to their clients.

RBI removed gold from the list of eligible commodities which could be hedged overseas and this prompted domestic jewellers and refiners to hedge gold price risk on domestic commodity exchanges.

Meanwhile, SEBI allowed Category-III alternative investment funds to trade in commodity derivatives and crude, copper, zinc and silver option contracts were launched in addition to gold options.

However, NCDEX reported a 10 per cent decline in annual turnover to Rs 5,29,432 crore owing to lower levels of volatility in agri commodities. Guar seed and gum which account for the largest share of turnover, was trading sideways during most part of the year.

ICEX, the youngest of the exchanges, registered a growth of 26 per cent to Rs 14,552 crore in FY19. ICEX trade is dominated by diamond contracts.