Commexes soar to records in 2010

8220;I expect the overall turnover of commodity futures market would be Rs 105,00,000 crore by 2010-end,8221; commodity markets regulator Forward Markets Commission FMC Chairman B C Khatua said.

He attributed the rise in turnover of the 23 commodity exchanges in the country 8212; including five national bourses to growing demand after the recovery of the global economy from a low in 2008 and 2009,besides high volatility in bullion and metals trade.

That apart,Khatua said the entry of two new national commodity bourses 8212; ICEX and ACE Commodity and Derivatives helped the futures market achieve robust growth. Regional bourse ACE upgraded itself to a national exchange in October this year,while the Indian Commodity Exchange ICEX became operational toward the end of 2009.

The year began on a positive note,with the turnover in the commodity futures market rising every month due to volatility in gold prices,which rose from Rs 17,000 per 10 grams to over Rs 20,000 per 10 grams during the course of 2010.

Till November,the combined turnover of the five national and 18 regional commodity exchanges stood at over Rs 94,94,721 crore Rs 94.94 trillion.

The country8217;s largest commodity bourse,MCX,saw its turnover grow by 48 per cent to Rs 78,95,921 crore,while that of leading agri-commodity bourse NCDEX improved by 39 per cent to Rs 9,73,206 crore during January-November,2010.

New entrant Indian Commodity Exchange ICEX clocked business of Rs 3,78,006 crore Rs 3,780 billion,which was higher than the turnover of the oldest national bourse,NMCE.

NMCE8217;s turnover rose by just 6 per cent to Rs 1,80,727 crore from Rs 1,70,419 crore in the review period.

In addition to the record turnover,the year will also be remembered for the introduction of the much-delayed Forward Contract Regulation Amendment bill in the Lok Sabha and a slew of measures taken by the FMC for boosting investors8217; confidence in the nascent market.

The FMC said it had nursed hopes the FCRA Bill would be ratified during this year8217;s Winter Session of Parliament,as it would have given more powers to the regulator and opened up doors for the launch of new products like options. The year was also significant from the perspective of investors in the commodity market,with the regulator getting tough on exchanges and brokers to ensure transparency and better governance.

Not only did the FMC disband the sub-broker system this year,it also amended the shareholding norms for commodity exchanges,making it mandatory for bourses to incorporate government firms on their respective boards with a stake of up to 10 per cent.

It had also made it mandatory for the original promoters to cap their stake in the bourses at a maximum of 26 per cent,as against 40 per cent earlier,while also regulating cross-holding in commodity and stock exchanges.

Although the year saw the lapse of the ban on trading in sugar futures,which was valid till September,the regulator did not permit the re-launch of new sugar contracts,despite expectations of surplus production this year.

Nevertheless,sugar futures trading is expected to kick off after the New Year,which will leave only three commodities 8212; rice,tur and urad 8212; in the banned category.

The commodity market has witnessed decent growth for the past few years,but it is hoped the pace will accelerate with the passage of the new FCRA Amendment Bill in 2011,which would pave the way for the launch of trading in a new product 8212; 8216;options8217;.

Furthermore,the entry of newer players that are waiting in the wings to enter the lucrative segment,would not only expand the market,but make it more competitive.