Capital and commodity market regulator SEBI’s decision to ban the top five commodity brokers from the market and the ongoing investigation against another 295 brokers seem to have started impacting the turnover on the commodity exchanges.
In February, the turnover on MCX, the country’s largest commodity exchange, was down 11 per cent at ₹5.40 lakh crore, against ₹6.09 lakh crore in January. On the NCDEX, the agriculture-focused commodity exchange, the turnover dipped 30 per cent to ₹29 lakh, against ₹41 lakh in January.
Replying to a
Last month, SEBI had declared the top five commodity broking firms — Motilal Oswal, Anand Rathi, Geofin Comtrade, India Infoline and Phillip Commodities — as “not fit and proper” to facilitate trade in the market. They were told to close down operations in 45 days.
SEBI investigation
The five are among the 300 broking entities under SEBI investigation for their alleged role in the ₹5,600-crore trade settlement scam at the Jignesh Shah-promoted National Spot Exchange Ltd (NSEL) in 2013.
Uttam Bagri, Chairman, Bombay Stock Exchange Brokers Forum, said the link between the fall in the exchanges’ turnover and the ban on the five commodity brokers can be viewed as a curious coincidence right now. However, if the trend sustains for some months, the events could definitely be correlated, he added.
The SEBI probe on about 300 brokers has hit sentiment and some of the small broking firms are voluntarily shutting down their commodity business, he further said.
New rivals
This apart, Bagri said, the fall in MCX and NCDEX turnover could be due to the entry of established exchanges such as the BSE and the NSE in the commodity space.
Noting that agriculture commodities has come under the government’s radar ahead of the elections, Ajay Kumar, Director, Kedia Commodities, said the ongoing SEBI investigation on brokers has also hit sentiment in the market.