MCX — earnings call

The transcript as filed. Every paragraph is addressable: its link names the page and the position it sits at in the call.

Prepared remarks

Moderator · Conference Operator

Ladies and gentlemen, good day, and welcome to the Multi Commodity Exchange of

The next question is from the line of Prayesh Jain from Motilal Oswal.

Prayesh Jain

Just any update on the base metal front with respect to the delivery centre issue or the sorting out of delivery centre and how do you trying to plan to scale this segment, which has been kind of weak for a pretty long period of time?

That will be my first question.

Praveena Rai

On base metals -- sorry, your question was not clear.

Are you asking what are the steps we are taking on base metals?

Prayesh Jain

Yes.

And we were thinking about consolidating the delivery centres, right, the Multi Commodity Exchange of India Limited

Moderator · Conference Operator

The next question is from the line of Amit Chandra from HDFC Securities.

Amit Chandra

My first question is on the rise that we have seen in the Bullion options.

This rise has come particularly after the change in the expiry from bimonthly to monthly and also a lot of volatility in the underlying prices.

So how do I attribute this to -- is it because of -- only because of the price volatility?

Or is it because of the change in expiry?

And also, what is the sustainability of this?

Plus, in terms of the normalized premium to notional, how do we see the premium to notional for the gold and silver contracts?

Plus, in terms of the participation, how has the participation in these new contracts been different from the earlier like crude and natural gas contracts that we have?

Rishi Nathany

So, if you see, you've asked 3 questions.

One is that while we have seen increasing participation in volumes in the gold and silver contracts, you cannot attribute it to any one specific reason.

It is always a combination of various factors which propel contracts to do better.

And of course, there's been volatility.

There's been heightened interest in these contracts, we made them monthly.

So, it's a combination of all these factors.

Now when you talk about notional -- premium to notional, ideally, if one makes a bimonthly contract into a monthly contract, the premium should halve, if you take it Multi Commodity Exchange of India Limited

Moderator · Conference Operator

Next question is from the line of Niranjan Kumar from Avendus Spark.

Niranjan Kumar

So, during October '25, the margin requirements for the gold and silver F&O contracts were increased in 2 phases, right?

So, can we expect this to go to previous level once the prices in these commodities cool off?

That's question number one.

And another question is like you have clearly explained why there was a technical glitch.

But can this have any impact on the future new product launch approvals from the regulator?

Praveena Rai

Yes.

So, when it comes to margins, I think the situation on bullion and specifically on silver was something that we watched and tracked very closely while it was playing out, especially in the pre-Diwali festive season.

On the back of what we saw in market, some unexpected backwardation where Indian markets also reflected the global markets.

We took some urgent actions.

We also made sure that our actions, I wouldn't say made sure, but we also reflected on actions that we saw in the global space in terms of how price movements were playing out as well as margin movements and so on in the global exchanges.

And I think our actions have helped and the situation has remained well under control.

And of course, overall macro environment is also stabilizing now.

So, we will keep a track on this.

We are watching all our -- not just volatility, open positions and so on and so forth.

And we'll rationalize at the suitable time.

Niranjan Kumar

Ma'am, also the impact on the -- like the technical glitch, will it have any impact for...

Multi Commodity Exchange of India Limited

Moderator · Conference Operator

The next question is from the line of Lavanya T.

Lavanya T

Ma'am, thanks for the update on tech issue and I think we prefer not to speculate on the regulatory impact.

But I just wanted to understand if there is any existing regulation or guideline which can give us a sense on what could be the maximum potential impact or penalty, if in case MCX had to face?

Praveena Rai

No, the circulars are all in public domain.

I think there's also been a lot of intense media coverage on them.

So those speculative details are well aware, but it will be inappropriate to term where the situation stands in the broader scheme of things with respect to those various rules and guidelines.

So, I think we'll have to let the process play out to get to the bottom of this before we can actually see where this situation will end.

Lavanya T

Got it.

Got it.

Also, just on -- earlier some time back, regulator spoke about potential improvement in participation on the commodity exchange, specific -- I mean, if you could help us understand a bit more in detail what can be done in domestic institutional participation side.

So, which kind of regulations or what can be done to improve domestic institutional participation on MCX?

Multi Commodity Exchange of India Limited

Moderator · Conference Operator

The next question is from the line of Raj Goenka from VJ Capital.

Raj Goenka

Ma'am, just one question I had is, how do I look into this?

Because last quarter, if you see the commodity prices, especially the bullion prices were very volatile.

But if you see sequentially, we don't have any kind of much growth.

So how should I -- is there a lack of participation?

Or what is it, please?

Just this one question.

Praveena Rai

So, I think we are -- we had a good push -- growth that we saw in the first quarter of the year.

We grew nearly by 33% over the previous quarter.

This was driven by certainly some macro indicators along with whatever that, we were driving from a business standpoint.

This month, we have seen this number to be flat.

And I think it's a broader reflection of where the 2 quarters need to be seen hand-in-hand, even though the underlying drivers, the participation, the members, the ADT and so on has been increasing.

And certainly, we've seen growth in bullion.

Bullion does have a slightly lower premium ratio, which is reflective of the way the product operates.

And that is also reflecting in this, a little flat growth that you see.

Multi Commodity Exchange of India Limited

Moderator · Conference Operator

Sorry to interrupt you, Mr. Goenka.

May we request you to please speak a bit louder.

We cannot hear you clearly.

Raj Goenka

I just wanted to find out one more ma'am.

Anything we are doing to increase this participation?

Praveena Rai

Yes, yes, of course.

I think everything we are talking about is what our business teams are doing, right?

So, when we look at number of members and FPIs coming on board, domestic institutions coming on board, more commercial participants coming on board.

All of these are very strong business actions in market.

Our teams are there on the ground working on all of this.

Moderator · Conference Operator

The next question is from the line of Bhavya Sanghvi from Alchemy Capital.

I'm sorry to interrupt you, Bhavya, we cannot hear you.

Your voice is breaking.

Can you please check?

Bhavya Sanghvi

Yes.

So, ma'am, just one question.

Could you give us the breakup of revenue?

Chandresh Shah

You're saying futures and options?

Bhavya Sanghvi

Yes, yes.

Chandresh Shah

So, for Q2, revenue from futures was INR114 crores and options, it was INR223 crores.

Bhavya Sanghvi

Got it.

And also, could you help us with transaction charges, membership fees and float income?

Chandresh Shah

So that is all part of the income numbers that we have presented.

Beyond this, we will not be able to give breakup.

Moderator · Conference Operator

The next question is from the line of Deepak Ajmera from Family Office.

Deepak Ajmera

Congratulation on successful product launches.

First question is on the electricity derivative market share.

Is there any natural edge that NSE has because of which the Multi Commodity Exchange of India Limited

Moderator · Conference Operator

The next question is from the line of Devesh Agarwal from IIFL Capital.

Devesh Agarwal

Two questions I wanted to ask.

First, with the increased activity that we saw in the bullion segment in the month of October, what would be the expectation on the SGF contribution?

Are we -- should we expect a significantly higher SGF contribution for the third quarter?

Chandresh Shah

So, Devesh, there has been some contribution, which we had to do in this quarter, I mean, in the month of October, and that is already there, reflected in the numbers, which are uploaded on the website.

You can have a look at that.

Devesh Agarwal

Okay, sure.

And lastly, recently, Groww mentioned, Groww MF, that they very recently had started the commodity trading on their platform.

So -- and they are one of the largest retail brokers.

So, what I wanted to know is, are there more brokers who aren't currently offering commodity trading on their platform?

If you can identify those, the relevant ones?

And if there are, what are we doing to engage with them to enable the commodity trading on their platform?

Rishi Nathany

So, Devesh, as I told, we've got 17 new members this year, and there are many more in the pipeline.

Of course, there are a lot of members who are there on the equity segments, but maybe not on the commodity segments.

And we are constantly reaching out to them, and that is how we have a healthy pipeline and conversions of new members into the system.

So, we believe that this would, going forward also, continue to grow, and we should add more members as we go forward.

Devesh Agarwal

Sir, would you be able to call out of the top 10 brokers by active clients, which NSE reports, how many would also be participating on MCX?

Rishi Nathany

I cannot name any specific member by name.

So, I don't know...

Multi Commodity Exchange of India Limited

Moderator · Conference Operator

The next question is from the line of Manoj Bhargav, an individual investor.

Manoj Bhargav

Yes.

Well, I'm actually a long-term investor.

We are a family office, and I'm not interested in quarter-on-quarter or year-on-year.

What I am interested in knowing is, I know very well that MCX is at a very nascent stage.

It's just sort of taking off.

As I see the commodity exchanges around the world are very vibrant as compared to the equity exchanges, should we expect with MCX going forward, let's say, a vision of 4 to 5 years in a similar sort of trajectory?

Rishi Nathany

So, Manoj, just to answer your question, commodity markets globally are -- maybe the leading ones, are more than a century old.

In India, commodity markets have just started in the early 2000s.

So, we are just roughly 22 years old, whereas equity markets in India, again, are more than a century old.

So, we are playing catch up.

And looking at the speed of growth, which we are seeing and it's visible to you as well, I'm sure we'll get there.

When?

I cannot tell you because it depends on the market as to how fast we grow.

Manoj Bhargav

Yes.

But the trajectory definitely looks positive, looks optimistic.

I mean, what I hear, what I've heard all your comments, I mean, it definitely sounds promising.

Is that how you see it?

Rishi Nathany

We are all for delivering growth, and it's up to you to see whether we are doing that or not.

Praveena Rai

No, no. Yes, I think you're right.

I think, we are positive.

We are optimistic.

A lot of business actions on the ground, product suite enhancements.

We've spoken about all of that.

So, I think we are moving across various axis here.

Moderator · Conference Operator

The next question is from the line of Aditya Makharia from HDFC.

Aditya Makharia

Yes.

I just had one long-term question again.

You see globally, what is the ratio of commodity volumes vis-à-vis equity.

So, let's say, if equity does a daily volume of, Multi Commodity Exchange of India Limited

Moderator · Conference Operator

The next question is from the line of Prayesh Jain from Motilal Oswal.

Prayesh Jain

First question is on the bullion part again, BULLDEX.

So far, the participation-wise, who are the -- whether it's retail, whether it's prop desk, whether it's hedgers, who have been kind of participating in this name?

And do you think that this product can attract more retail base versus the other products that we have?

Rishi Nathany

So, to answer your question, Prayesh, participation is all rounded, and we would always like to see all rounded participation from all market participant types.

So, whether we will see retail or hedgers or institutional, I cannot comment because end of the day, we are a platform and we reach out to all participants, and it is our desire that all such participants come and participate on the platform and on every contract.

So ideally, what we look forward to is the contract doing better and better.

Prayesh Jain

Extension to that would be, do you expect some cannibalization between the existing -- the main base of commodity option contracts and the index contracts?

Multi Commodity Exchange of India Limited

Moderator · Conference Operator

The next question is from the line of Tejkumar Jain from TK Jain & Company.

Tejkumar Jain

I just want to ask on the fixing of record for splitting of shares.

Normally, it speaks after -- immediately after the shareholders' approval meeting.

Any reasons behind this for delay?

Chandresh Shah

I think it is -- there are some steps which we have to take -- special steps which we have to take for being an MII.

I think it is in the final stages.

The date will be announced shortly.

Moderator · Conference Operator

Ladies and gentlemen, as there are no further questions, I would now like to hand the conference over to Ms. Praveena Rai, MD and CEO, MCX, for her closing comments.

Multi Commodity Exchange of India Limited

Thank you.

Ladies and gentlemen, on behalf of Multi Commodity Exchange of India Limited, that concludes this conference.

Thank you for joining us, and you may now disconnect your lines.

Questions and answers

Moderator · Conference Operator

First question is from the line of Devesh Agarwal from IIFL Capital.

Please go ahead.

Devesh Agarwal

Thank you for the opportunity, everyone, and congratulations on a good set of numbers.

My first question is continuing on the tech issue.

So, could you help us, one, understand better what exactly was the issue that happened and whether it was a platform problem?

It was from the TCS side or whether it was an operational challenge that we faced and what exactly have we taken -- steps taken to rectify that?

And is the trading now moved back to the main site?

Multi Commodity Exchange of India Limited