MCX plans currency derivatives foray

MCX plans currency derivatives foray

News:

1. The Multi Commodity Exchange of India (MCX) plans to enter the currency derivatives segment.

Important facts:

2. The MCX is the county’s largest commodity bourse in terms of market share.

3. The unified license regime will allow equity and commodity exchanges to expand their offerings by starting new segments.

4. The BSE is the largest player in the currency segment followed by the NSE with the Metropolitan Stock Exchange of India (MSEI) having small share.

5. The BSE and the National Stock Exchange (NSE) have announced plans for commodity trading under the new regulations framework.

6. Currency derivatives see average daily volumes in excess of Rs. 60,000 crore.

Turnover:

7. In June, it reported an average daily turnover of Rs. 33,961 crore on its currency derivatives platform while the NSE clocked Rs. 29,161 crore.

8. MSEI reported a daily average turnover of only Rs. 239 crore in June.

9. The average daily turnover of the currency segment of NSE was Rs. 12,705 crore in 2014-15, which rose to Rs. 18,603 crore in 2015-16 and thereafter to Rs. 20,779 crore in 2017-18.

10. This fiscal till date, the average daily turnover is pegged at Rs. 29,008 crore

11. Advantages:

• MCX adding currency derivatives alongside commodity markets may facilitate hedging by import- / export-focused commodity merchants
• The market participants are likely to enjoy lower fees through competition.