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» mcx profile
This is a research report on
Vivek Sahu Vivek Sahu
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742 views, 0 comments, Last Update: Apr 2, 2012.
Multi Commodity Exchange of India Ltd
LAMON RUTTEN (MD & CEO)
Headquartered in Mumbai, Multi Commodity Exchange of India Ltd (MCX) is a state-of-the-art electronic commodity futures exchange. The demutualised Exchange has permanent recognition from the Government of India to facilitate online trading, and clearing and settlement operations for commodity futures across the country.Having started operations in November 2003, today, MCX holds a market share of over 80%* (87.3% during the nine months ended December 31, 2011 and 82.4% in FY2011) of the Indian commodity futures market, and has more than 2,153 registered members operating through over 2,96,896 including CTCL trading terminals spread over 1,572 cities and towns across India. The Exchange was the fifth largest^ commodity exchange, among all the commodity exchanges considered in the Futures Industry Association survey, in terms of the number of contracts traded for the six months ended June 30, 2011.
MCX offers more than 40 commodities across various segments such as bullion, ferrous and non-ferrous metals, energy, and a number of agri-commodities on its platform. The Exchange introduces standardised commodity futures contracts on its platform. These contracts in futures exchanges provide an anonymous trading environment for ideal price discovery. The Exchange is the world's largest exchange in Silver, the second largest in Gold, Copper and Natural Gas and the third largest in Crude Oil futures, based on the comparison of the trading volumes of our Exchange with those of the leading global commodity futures exchanges in the world, for the calendar year 2010 and the six months ended June 30, 2011.
MCX has been certified to three ISO standards including ISO 9001:2008 Quality Management System standard, ISO 14001:2004 Environmental Management System standard and ISO/IEC 27001:2005 Information Security Management System standard. The Exchange’s platform enables anonymous trades, leading to efficient price discovery. Moreover, for globally-traded commodities, MCX’s platform enables domestic participants to trade in Indian currency.
The Exchange strives to be at the forefront of developments in the commodities futures industry. MCX was the first exchange in India to initiate evening sessions to synchronise with the trading hours of global exchanges in London, New York and other major international markets. It was the first exchange in India to offer futures trading in steel, crude oil, and almond. In June 2005, MCX launched MCXCOMDEX, India’s first real time composite commodity futures index, which provides our members with valuable information regarding market movements in the key commodities, as determined by physical market size in India, which are actively traded on our Exchange. We have introduced several other indices, including MCXAgri (agricultural commodities index), MCXEnergy (energy commodities index) and MCXMetal (metal commodities index). We also have three rain indices, namely RAINDEXMUM (Mumbai), RAINDEXIDR (Indore), and RAINDEXJAI (Jaipur) which track the progress of monsoon rains in their respective geographic locations. In December 2009, we launched EFP transactions for the first time in India, which enables parties with futures positions to swap their positions in the physical markets and vice versa.
MCX has forged strategic alliances with various national and international trade bodies / associations / organisations, which we believe enables us to grow our business and expand our market presence. Among international alliances, we have formed strategic alliances with a number of exchanges such as the London Metal Exchange, the New York Mercantile Exchange, the LIFFE Administration and Management (under renewal), the Baltic Exchange Limited, Shanghai Futures Exchange and Taiwan Futures Exchange.
MCX’s technology infrastructure is the foundation of our business and a key factor in the Exchange’s development. The Exchange’s online trading platform is accessible to our members through our trader workstation or computer-to-computer link (“CTCL”) using multiple connectivity media including VSATs, VPN, leased lines, and the internet. Our electronic platform is supported by our infrastructure and advanced technology, allowing faster trade execution, anonymity, price transparency, prompt and reliable order routing, trade reporting, market data dissemination and market surveillance. We believe we have deployed effective technology to minimise the various risks including member defaults. Our system tracks our members’ margin utilizations and tracks mark-to-market (“MTM”) losses online against their deposit available with our Exchange and automatically generates alerts and takes pre-decided actions.
Our electronic trading platform is supplied by our Promoter, FTIL, which is one of the leading technology companies in the development and deployment of exchange related software and technology in India. We believe that technology for the exchange industry is difficult to replicate, thus providing us with a competitive advantage. Further, we operate in an environment which requires constant technology upgrades or variations and support due to changes required by the regulatory regime and market forces. The technical expertise and experience of FTIL enable us to obtain speedy and efficient technology solutions, such as customisation and development of new software for new products and services. Scalable Technology Platform and Business Model We believe that our technology platform and business model are highly scalable and have the potential to generate better margins at greater volumes. We plan for and structure our business costs based on our historical and expected growth. Consequently, we have made significant investments in developing our fixed operating infrastructure, including our technology systems, to support our anticipated growth and increase in the demand for our products. We believe that our current technology infrastructure is sufficient to handle daily trading volumes of up to 10,000,000 trades a day, and have handled a high of 1,867,612 trades in a day. Increased trading activity on our Exchange would result in increased profitability. Further, we intend to increase the use of data generated from the commodity futures contracts traded on our Exchange to capitalise on the opportunities in market data products and information dissemination. We believe that our overall business model is highly scalable and that it offers potential for economic growth of our business with limited incremental costs.
We envision a unified Indian commodity market that is driven by market forces and continually provides a level playfield for all stakeholders ranging from the primary producer to the end-consumer; corrects historical aberrations in the system; leverages technology to achieve exceptional efficiencies and ultimately lead to a common world market. We also envision a brand image for MCX that identifies it as the Exchange of Choice not only by direct participants in the commodity ecosystem but also by the general public.
MCX shall accomplish the above vision by relentlessly endeavouring to enhance awareness and understanding of exchange-enabled trade in commodity derivatives. The Exchange will continue to minimise the adverse effects of price volatilities; providing commodity ecosystem participants with neutral, secure and transparent trade mechanisms; formulating quality parameters and trade regulations in conjunction with the regulatory authority. Moreover, it will continue to enforce a zero-tolerance policy toward unethical trade practices-attempted or real-by any participant/s; and invest in the all-round development of the commodity ecosystem.
Board of Directors
Mr. Venkat Chary - Independent Chairman Mr. Jignesh Shah - Non Executive Vice Chairman Mr. V. Hariharan - Non Executive Director Mr. Joseph Massey - Non Executive Director Mr. P. G. Kakodkar - Non Executive Director Mr. Paras Ajmera - Non Executive Director Mr. C. M. Maniar - Independent Director Mr. Shvetal S. Vakil - Independent Director Mrs. Usha Suresh - Independent Director, FMC Nominee Mr. R. M. Premkumar - Independent Director, FMC Nominee Prof. (Mr.) K. T. Chacko - Independent Director, FMC Nominee Prof. (Ms.) Ashima Goyal - Independent Director, FMC Nominee Mr. P. Satish - Independent Director, NABARD Nominee Mr. K. Venugopal - Non Executive Director, SBI Nominee Mr. Lambertus Rutten - Managing Director & CEO
Key Managerial Personnel
Mr. Parveen Kumar Singhal Deputy Managing Director Mr. P. Ramanathan Company Secretary & Chief Compliance Officer Mr. Dipak D. Shah Director - Market Operations Mr. Sumesh Parasrampuria Director - Business Development Mr. PP. Kaladharan Chief Technology Officer Mr. J. B. Ram Senior Vice President - Membership & Inspection Mr. Rajesh V. Bagwe Vice President - Human Resources Mr. Mahesh Joshi Chief financial Officer Mr. Raghavendra Prasad Vice President – Legal
? Financial Technologies (I) Ltd.
State Bank of India and its associates.
National Bank for Agriculture and Rural Development (NABARD).
National Stock Exchange of India Ltd. (NSE).
Fid Fund (Mauritius) Ltd. - an affiliate of Fidelity International.
Corporation Bank, Union Bank of India, Canara Bank, Bank of India, Bank of Baroda
SBI Life Insurance Co. Ltd.
Infrastructure Leasing & Financial Services Limited (IL&FS)
Merrill Lynch Holdings (Mauritius), and
New York Stock Exchange
The Company's philosophy on corporate governance aims at enhancing the shareholder value. The corporate governance philosophy is driven by the interest of stakeholders and business needs of the Company. The principles of corporate governance have emerged as the cornerstone of the Company's governance philosophy.
The long-term interests of the stakeholders are served by continuous adherence and enforcement of the principles of good corporate governance. To keep pace with an evolving global environment, the Company continuously innovates and adapts governance practices to meet new demands. This ensures efficient conduct of the affairs of the Company, which, in turn, helps the Company achieve its goal of maximizing value for all its stakeholders.
The Company's governance philosophy is based on the fair and transparent disclosure of issues related with the Company's business, financial performance, and other matters of stakeholders' interest.
Code of Conduct
The Company has formulated and implemented a comprehensive code of conduct for the board of directors and senior management of the Company. Accordingly, the declaration by the chief executive officer under Clause 49 of the Listing Agreement, regarding adherence to the code of conduct, has been obtained since the financial year 2007-08 onwards. As the Company is a commodity exchange, all employees are required to affirm the compliance of the code of ethics at the time of joining the Company. The Code applies to the Directors of Multi Commodity Exchange of India Limited, (the Company), Members of Senior Management of the Company (i.e. up to the designation of Vice- President). The Board of Directors of the Company has adopted this Code of Conduct as a commitment to the principles of corporate governance. Any amendments to this Code shall be first approved by the Board of Directors and promptly disclosed on this website. The Directors and Senior Management are required to: ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? Attend Meetings Exercise of Authority Conflict of interest Comply with policies Ethical Conduct Environment & Corporate Citizenship Confidentiality Company property Gift Fair dealings Safety Enhance skill sets Equal Opportunity Non compete Accuracy of financial records Cordial Relations Concurrent Employment Insider Trading Reporting Concerns Periodic Discussions
Promoter Group Companies
? Exchange Ventures
National Spot Exchange Limited (NSEL) www.nationalspotexchange.com Indian Energy Exchange (IEX) www.iexindia.com
A pan-India electronic spot market for agri commodities trading India’s first power exchange for trading in electricity First international Pan-Asian derivatives exchange, that provides a single platform for multi-product trade between Asia and the world First multi-asset, multi-access international exchange in Bahrain and the Middle East, where market participants can raise capital and manage risk using both conventional and Islamic financial instruments. Multi-asset class electronic exchange from Mauritius to serve as a gateway to the African continent Multi-asset-class pan African exchange and ecosystem based out of Botswana hub First international commodity and currency derivatives market in the Middle East
Singapore Mercantile Exchange (SMX) www.smx.com.sg
Bahrain Financial Exchange (BFX) www.bfx.bh
Global Board of Trade (GBOT) www.gbot.mu
Bourse Africa (BA) www.bourseafrica.com Dubai Gold and Commodity Exchange (DGCX) www.dgcx.ae
India’s No. 3 inter-bank forex exchange platform
IBS Forex www.ibsfx.com
Pan-India warehouse network platform to offer organized markets for rural lending A platform to enable 'any transaction on mobile' Global content provider in the financial information services industry, which integrates and disseminates ultra-low latency data feeds, news and information to support investment decisions Specialises in securities and commodities market education It is the clearing arm of the MCX-SX, and has been jointly promoted by MCX-SX, MCX and FTIL. Provides high quality domain consulting services to the Banking and Financial Services Industry on financial risk management, risk analytics Riskraft Consulting Ltd. (Riskraft) www.riskraft.com/ MCX-SX Clearing Corporation Limited (MCX-SX CCL) FT Knowledge Management Company Limited www.ftkmc.com TickerPlant Limited www.tickerplantindia.com National Bulk Handling Corporation (NBHC) www.nbhcindia.com atom technologies www.atomtech.in
STRATEGIC REGIONAL ALLIANCES
? ? ? ? ? ? ? ? ?
Bombay Bullion Association (BBA)
Bombay Metal Exchange (BME) Solvent Extractors’ Association of India (SEA)
Pulses Importers Association (PIA)
The United Planters Association of Southern India (UPASI)
India Pepper & Spice Trade Association (IPSTA)
Rajkot Seeds, Oil and Bullion Association
MCX has also established the National Gold Delivery mark e t i n partnership with the World Gold Council.
? The Tokyo Commodity Exchange (TOCOM)
The Baltic Exchange, London
New York Mercantile Exchange (NYMEX)
Chicago Climate Exchange (CCX)
London Metal Exchange (LME)
Dubai Multi Commodities Centre (DMCC)
New York Board of trade (NYBOT)
Bursa Malaysia Derivatives, Berhad (BMC)
Zhengzhou commodity Exchange (ZCE)
COMMODITIES TRADED ON MCX
Around 70 commodities are traded on MCX. These are ? ? ? ? ? ? ? ? ? ? ? ?
bullion (gold, silver etc) energy (crude oil, Brent crude oil, ME crude oil ,natural gas, furnace oil) grains (wheat, rice etc) plastic (polypropylene etc) metals (ferrous and non-ferrous) oil & oil seeds (mustard seed, castor seed etc) fibres (kapas, cotton long staple etc) spices (black pepper, red chilli etc) pulses (chana, tur etc) sugar (gur, sugar medium grain) plantations (rubber, arecanut) and O t h e r s s u c h a s m e n t h a o i l , c a s h e w k e r n e l , a n d g u a r s e e d , g u a r g u m , potato
ASSOCIATE COMPANIES OF MCX
? ? National Bulk Handling Corporation Ltd (NBHC)
National Spot Exchange Ltd (NSEL)
BUSINESS OPERATIONS OF MCX
MCX shall conduct trading in derivatives contracts in various commodities permitted by the Government of India under the Forward Contracts Regulations Act, 1952, and any other Act subject to approval of the Forward Markets Commission or any other authority as may be applicable.
These Rules shall be subject to the provisions of the Forward Contracts (Regulation) Act, 1952 and Rules framed there under, Articles of Association, Rules and Bye-Laws of Multi Commodity Exchange of India Limited (MCX), as applicable to the Members of the Exchange, their Representatives and their Clients.
These Rules shall be enforceable on the Members of the Exchange, Clearing Banks, Clients, Constituents and all other Participants operating on or through the Exchange in respect of their rights and obligations relating to trading on MCX. They shall be subject to jurisdiction of the Courts of Mumbai irrespective of the place of business of the Members of the Exchange or their customers and clients in India or elsewhere.
ELIGIBILITY FOR TRADING
At MCX, only the members of the Exchange, who have been admitted as such by the Board, are eligible to participate in trading on the Exchange platform. Persons, who are not members of the Exchange, can participate in trading on the Exchange platform only as authorized persons or clients through a registered member of the Exchange.
MEMBERSHIP FOR MCX
A person who is desirous of becoming a registered member of Exchange may apply for any of the following categories:1) Trading-cum-Clearing Member (TCM) A TCM is entitled to trade on his own account as well as on account of his clients, and clear and settle these trades himself. A sole proprietor, a partnership firm, a joint hindu undivided family, a company, a cooperative society, a public sector organization, statutory organization or any other Government or non-Government entity can apply for TCM.
2) Professional Clearing Member (PCM)
A PCM is an Institutional Clearing Member, who is entitled to clear and settle trades executed by other members of the Exchange. A company and an institution only can apply for PCM.
3) Institutional Trading-cum-Clearing Member (ITCM) An ITCM is entitled to trade on his own account as well as on account of his clients, clear and settle trades executed by himself as well as of other members of the Exchange. A company and an institution only can apply for ITCM.
4) Trading Member (TM) A Trading Member is entitled to trade on his own account as well as on account of his clients, but has no right to clear and settle the trades himself. Such member shall he affiliated with any one of the Institutional Trading-cum-Clearing Member (ITCM) or Professional Clearing Member (PCM) having clearing rights on the Exchange. A sole proprietor, a partnership firm, a joint Hindu undivided family, a company, a cooperative society, a public sector organization, statutory organization or any other Government or non-Government entity can apply for TM.
The Exchange shall operate on all days except Sundays and Exchange specified holidays. A list of holidays for each calendar year will be notified by the Exchange in advance.
The Exchange will have trading session from Monday to Saturday for different commodities as under:
Monday to Friday
10.00 A.M. to 05.00 P.M
05.00 P.M. to 11.30 P.M
All Commodities except Agricultural Commodities.
10.00 A.M. to 2.00 P.M
Trading @ MCX
The Trader Work Station (TWS) is the application through which members access the trading platform, place orders and execute trades. The TWS offers a multitude of user friendly trading features which include commodity price ticker, market watch screen displaying best buy, best sell, last traded price, volume for the day, open interest etc., top gainer and loser contracts, net position, on-line back up facility etc Trading System The best five buy and sell orders for every contract available for trading are visible to the market and orders are matched based on price time priority logic. Orders can be placed with time conditions and/ or price conditions 1) Time related Conditions: DAY order- A Day order is valid for the day on which it is entered. If the order is not matched during the day, the order gets cancelled automatically at the end of the trading day.
GTC - A Good Till Cancelled (GTC) order is an order that remains in the system until the expiry of the respective contract in which it is entered or until when the same is cancelled by the member.
GTD - A Good Till Date (GTD) order is valid till the date specified by the member. After the specified date the unexecuted orders get automatically cancelled by the system.
IOC - An Immediate or Cancel (IOC) order allows a member to execute the orders as soon as the same is placed in the market, failing which the order will get cancelled immediately
2) Price Conditions: Limit Order – The order wherein the price is to be specified while placing the same. Market Order – The order at the best available price at the time of placing the same.
December 20, 2011 November 23, 2011 October 03, 2011 September 2011
Launch of Copper Mini and Nickel Mini contracts Launched Gold Petal New Delhi contracts Launch of futures in Cotton by our company Our Exchange became the world’s 5th largest commodity exchange in terms of the number of futures contracts traded during the period January to June 2011, based on Futures Industry Association (FIA) volume survey and market data
September 23, 2011
Our Company recorded its highest daily turnover since inception of Rs. 1116.66 billion
April 18, 2011 February 18, 2011 December 20, 2010
Our Company launched gold petal, 1 gram gold futures contract Our Company launched silver micro, 1 Kg silver futures contract Our Company entered into an MoU with Taiwan Futures Exchange (TAIFEX) to develop commodity futures market in India
December 9, 2010
Our Company released Commodity Insights Yearbook 2010 in collaboration with PwC
October 20, 2010
Our Company obtains renewal of its ISO 9001:2008 certification from Bureau Veritas Certification (India)
June 7, 2010 December 3, 2009
Our Company signed an MoU with Shanghai Futures Exchange Our Company is the sixth largest commodity futures exchange globally in terms of the number of contracts traded on the exchange for the period January to June 2009
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