MCX: Developing Indian
Commodity Ecosystem
Joseph Massey
Deputy Managing Director
MCX
Why nations need commodities markets
 Commodities are generic
 Prices are determined on global basis
– international trade
– Information effect
– Inter-substitutability –
• Food for energy
• Commodity as investment
• Price related switching
 Market pricing efficient & gives long term signals
 All carry price risk & better to manage
Indian Contribution to Global Futures
Market
Commodity Futures Volume in Contracts Traded (in mn)
Market
Region
America
Europe
Asia
Africa
Global Total*
2005
287
120
344
1
753
Share (%)
38.2%
16.0%
45.7%
0.2%
100.0%
India
72
9.6%
Only top 20 exchanges are considered
Source: FIA
Market
2006
390
180
415
1
987
99
Share (%)
39.5%
18.3%
42.1%
0.1%
100.0%
10.0%
Market Share of Traded Futures Volume
Market Share of Total Global Futures Volume in Year
2006
Agriculture
45%
Energy
Metals
34%
21%
Market Share in Indian Commodity Market
Market Share
Market Share
(in Contracts
(in Value
Energy
Metals
Agri
Traded)
6.9%
35.3%
Traded)
5.10%
56.9%
57.7%
38.0%
Share of Global Commodities in India
Dome
stic
Commodity
35%
Globa
l
linked
65%
Gold
Silver
Crude Oil
Copper
Zinc
Aluminium
Ref Soy Oil
Relationship between
Indian & Benchmark
Global Exchanges
(Percent)
95.3
97.2
97.9
99.8
98.6
89.4
84.5
Share of Agri, Energy & Metals of the
Total MCX Volume in Contracts Traded
(2006)
Key Contracts Traded on MCX (2006)
Agri
18%
Name of the
Contract
Energy
15%
Contracts
Turnover (in
Traded)
USD bn)
1 GOLD
2 SILVER
9,957,351
9,498,544
203.7
115.0
3 COPPER
5,293,964
40.0
4 CRUDEOIL
5 MENTHAOIL
4,466,538
2,428,230
29.6
12.5
562,647
887,733
11.4
8.6
1,953,756
2,982,222
7.4
6.2
1,870,417
515,777
3.9
2.4
12 GUARSEED
13 POTATO
451,913
397,908
2.1
1.7
14 CARDAMOM
572,157
1.2
45,635,538
460.4
6 ZINC
7 REFSOYOIL
Metals
67%
Volume (in
8 NATURALGAS
9 SILVERM
10 GOLDM
11 GRAM
Grand Total
Mini Contracts of Global commodities
in Indian Time Zone
Commodity
Benchmark Exchange
Contract Size
(in USD)
Copper
25 tonnes (LME)
150,000
Aluminium 25 tonnes (LME)
137,500
Zinc
25 tonnes (LME)
83,750
Crude Oil 1000 barrels (NYMEX) 60,000
Gold
100 troy oz
64,000
Silver
5000 troy oz
65,000
Indian Market
Contract Size (in USD)
1 tonne
6,000
2 tonnes
5,500
5 tonnes
16,750
100 barrels
6,000
1 kilogram
20,500
30 kilograms
12,600
• Availability of smaller contracts on Indian exchanges helps smaller
traders/companies to hedge their risk
• Price discovery at Indian time zone
• High level of relationship between Indian and global markets in
globally linked commodities
New developments expected
 New products – Options and Indices (Weather,
commodity, Carbon Credits, freight, etc.)
 Exchange traded funds
 Banks, MFs and FIIs in commodities market
 Global strategic alliance and cross listing of products
 Domestic investors going global
 Capital account convertibility & greater global
integration
50000
45000
40000
35000
30000
25000
20000
15000
10000
5000
0
Market Share of MCX (Jan - Feb 2007)
Feb-07
Nov-06
Aug-06
May-06
Feb-06
Nov-05
Aug-05
May-05
Feb-05
Nov-04
Aug-04
May-04
Feb-04
NCDEX
24.0%
Nov '03
Million USD
MCX Growth Story
NMCE
1.0%
Others
1.5%
MCX
73.5%
Market Share of Global Bullion Exchanges
(2006)
Gold Global Market Share (in Contracts Traded 2006)
Silver Global Market Share (in Contracts
Traded - 2006)
TOCOM
35%
CBOT
8%
MCX
19%
Others
3%
COMEX
26%
CBOT
17%
COMEX
24%
Others
9%
TOCOM
4%
MCX
55%
Market Share of Global Energy Exchanges
2006
Crude Oil Global Market Share (in
Contracts Traded - 2006)
MCX
3.03%
ICE
48.44%
Others
0.09%
Natural Gas Global Market Share
(in Contracts Traded - 2006)
ICE
2%
MCX
8%
NYMEX
47.14%
TOCOM
1.30%
NYMEX
90%
MCX Comdex Vs Global Commodity
Indices
600
4000
3000
400
2500
300
2000
1500
200
1000
100
500
Correlation of COMDEX with:
CRB Index
Rogers com Index
DJAIG com Index
GSCI spot Index
2/7/2007
12/7/2006
10/7/2006
8/7/2006
6/7/2006
4/7/2006
2/7/2006
12/7/2005
10/7/2005
0
8/7/2005
0
33.71%
83.24%
48.70%
69.24%
CRB, DJAIG & GSCI Spot Index
500
3500
6/7/2005
COMDEX & Rogers Commodity Index
4500
MCX Cross Border Strategic Alliances
MCX – Reforming Commodity Ecosystem
Increase
the
Holding
Capacity
Collateral
Financing
Grading &
Standardizatio
n
National Level Price Discovery in Perishable & Non-Perishable
Commodities, Market Infrastructure and National Reach.
Gramin Suvidha Kendras: MCX India Post Initiatives
Villagers in Dhamangaon benefiting from
MCX futures commodity prices
Shri S P Tayde – Village Postmaster
Dhamangaon writing MCX rates on
Board
Commodity Suchna Kendras: MCX
Initiative
An e-Ticker in Indore, Madhya
Pradesh
First Commodity Suchna Kendra
at APMC, Vashi being inaugurated
by Shri Sharad Pawar
Thank You!
Contact:
102 A , Landmark
Suren Road, Chakala
Andheri (East)
Mumbai 400 093.
Tel: +91-22 - 6709 9300
Fax :+91-22 - 6709 9044
Web : www.mcxindia.com
DISCLAIMER:The Information in the presentation is
solely for informational purpose and should not be
regarded as a recommendation by MCX. All
information in the presentation is obtained from the
sources believed to be reliable and MCX or any of the
associate entities make no representation as to its
completeness or accuracy.MCX accepts no obligation
to correct or update the information or opinion.No
member of MCX or its associate entities accept any
liability whatsoever consequent ional or other loses
arising from the use of the presentation and or further
communication in relation to this presentation.
MCX hits record
turnover of
17987 crores