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The 143-year-old BSE will start a new innings with the launch of its commodity exchange on October 1.
The exchange, which will start trading in gold and silver contracts, is hoping to take on rivals with its promise of lower trading charges and superior technology.
BSE will face competition not only from existing players such as MCX, NCDEX and ICEX, but also from the NSE, which too is making its commodity debut on October 1.
Ashishkumar Chauhan, MD and CEO of BSE, told BusinessLine the exchange has received SEBI approval to launch gold and silver contracts. Applications will next be made for crude and natural gas, and later for other base metals. The focus will shift to agriculture commodities, too.
“We expect people who are familiar with BSE and not trading on MCX to trade with us. Of the 1,400 registered members, 450 have already taken membership in the commodity exchange,” he said.
Intense competition has driven two exchanges — Kotak Group-promoted ACE Commodity Exchange and Universal Commodity Exchange — to shut shop, and the oldest exchange, NMCE, to merge with ICEX.
In fact, rumours of an MCX-NSE merger for substantial commodity play refused to die down even after the two denied it.
Chauhan is not unduly worried about five exchanges competing in the narrow commodity exchange space. Before the launch of electronic commodity exchanges, there were 20 regional commodity exchanges surviving on a single commodity and a small group of investors, he recalled.
“If an exchange can survive with a single commodity, India, with a population of 125 crore, can easily accommodate five exchanges,” he said.
“We are not worried about the merger talks (of MCX and NSE),” he added. “We have members in 3,000 cities and over 2,000 terminals. All of them are our opportunity in the commodity venture.”
The Indian futures market developed independent of the spot market because it took the easy route of taking foreign prices for trade settlement. The end users lost connect with the futures market and the number of participants declined to about 50,000 a day, he said. It is abysmally low considering the fact that every single consumer carries commodity risk, he added.
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