Multi Commodity Exchange of India (MCX) is the latest buzz in stock exchange markets. MCX is carrying on transactions in both precious and base metals, yet gold and silver contributes to its maximum trade values. The two metals reckoned 49 per cent of MCX’s turnover during 2007 that increased expeditiously to 63.7 per cent by 2011. A range of agricultural products, along with energy-related items, such as like oil also involves a significant involvement.
Founder of FTIL, Jignesh Shah, the man behind MCX’s success, clinched his biggest accomplishment when he got approval from regulatory body SEBI (Securities and Exchange Board of India) in September 2003. MCX is responsible for 98.5 per cent of silver and 97.1 per cent of gold trade of India that beat its nearest competitor National Commodity and Derivatives Exchange. The market share of MCX is steadily increasing, which can be observed with over- subscribed IPO held in February this year. The company raised Rs. 663 crore from such issue in return of 6.43 million shares.
The success mantra for the enterprise lies on its willingness to handhold members in the early years. MCX believes ‘Every minute counts’ and the company is capitalizing the reduced response time by exchange.
Once the additional margin money is remitted, an immediate call from the trader would enable him to take fresh trade positions in mere five minutes. The competitors of MCX sometimes takes longer than four hours to execute the same transaction.
MCX intends to involve more ‘jobbers’, the day traders who act as market makers to effectively utilize the available opportunities. Few industry experts say that the exchanges commodities at MCX like gold and silver not only have highest turnover but also implicates higher volumes. This, in turn, generates higher transaction fees in contrast with agricultural commodities.
MCX has changed the way India perceives growth in the financial sector. But for FTIL Founder, Jignesh Shah, this is just the beginning.
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