Equity and commodity trading from same platform

Palak Shah Mumbai | Updated on January 09, 2018 Published on December 28, 2017

Ajay Tyagi (right), Chairman, SEBI, with G Mahalingam, Whole-Time Member, at a press conference in Mumbai on Thursday. - SHASHI ASHIWAL

Kolkata, West Bengal. Date: 06/12/2014.
Ashish Chauhan, Managing Director & CEO, BSE.
Photo: Ashoke Chakrabarty   -  BUSINESS LINE

Battle among exchanges set to hot up

The battle among Indian exchanges for market share is all set to spill over into the commodity segment. At its last board meet of 2017 held on Thursday, SEBI approved the convergence of stock and commodity trading platforms.

Consequently, the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) can now launch commodity trading on their platforms, while MCX can do equity from October. All the three exchanges are locked in a fierce battle to dominate the country’s exchange space.

Concept of single platform

The concept of a single trading platform for stock and commodities has been in limbo since 2015. A couple of years ago, the BSE sought SEBI permission to launch commodity trading after the Forward Markets Commission, the commodity regulator, was merged with SEBI. The regulator, however, put the BSE’s request on the backburner. Just over a couple of months after he took charge as SEBI chairman this year, Ajay Tyagi allowed single licence for stock and commodity brokers. Now, it has approved a single trading platform.

“We were mentally prepared for SEBI’s move,” said Mrugank Paranjape, MD & CEO, MCX. “There is a lot more work to be done with regard to the ecosystem for commodity markets, and we hope it is achieved by October.”

Currently, MCX enjoys a monopoly in trading bullion and oil contracts, with around 90 per cent volume on its platform. Commodity trading in India is mainly concentrated in metals and oil; agri trading has not picked up as anticipated. Experts said SEBI’s move could bring some excitement to the otherwise dull stock exchange space.

BSE gearing up

“BSE is all geared up for action and will provide commodity trading facility to more than 3.71 crore registered investors,” Ashish Chauhan, MD and CEO, BSE, told BusinessLine. “Trading in non-agri commodity contracts will be launched first on the BSE platform. SEBI’s move is welcome.”

Paranjape said the MCX board will now formally take up the question of when it wants to launch equity trading. Vikram Limaye, MD& CEO, NSE, was on a flight and could not be reached for comments in time. But another NSE official said the exchange will be ready to launch commodity trading by October and looked at SEBI’s decision favourably.

The share price of BSE and MCX, both listed exchanges, could see some reaction in the coming days. The move could help NSE sustain its valuations and make its IPO attractive.

Published on December 28, 2017
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