Complete Information About Multi Commodity Exchange (MCX)

22 Feb

Posted by Shyam as Market News

With the MCX IPO issue on offer, investors are trying to find out as much as possible about the company before investing. So here you can get the complete details about MCX before you plan to invest in the MCX IPO. Multi Commodity Exchange of India Ltd (MCX), India’s largest commodity exchange was incorporated in the year 2003. MCX, NCDEX (National Multi Commodity Exchange of India Limited), NMCE (National Multi Commodity Exchange of India Limited), ICEX (Indian Commodity Exchange Limited) and ACE (Derivatives & Commodity Exchange Limited) are top five highly recognised electronic multi-commodity national exchanges in India, accounting for 99.5% of the commodity turnover in India.

MCX alone accounts for 82.3% market share of the Indian commodity futures exchange industry. Whereas, NCDEX holds-11.8%, NMCE-2.9%, ICEX-1.8%, ACE-0.1%, others-1.1%. MCX has received permanent recognition from government of India to provide online trading platform as well as clearing and settlement operations for commodity futures in India. MCX is a de-mutualised commodity exchange having more than 2,153 registered members working through 296,000 trader work stations across 1,572 cities and towns in India.

MCX is currently offering trading in 49 commodity futures which includes metals, energy, agriculture, weather, etc. It’s the world’s largest exchange in silver, second largest in gold, copper and natural gas and third largest in crude oil. MCX itself is world’s 5^th largest commodity exchange in terms of the number of contracts traded. A transaction fee paid by members towards execution of trade represents 81.5% of its total income, membership admission fees along with annual subscription fees and terminal charges accounts for 3.3% of total income and other income accounts for 15.2%.

Financial Technologies (India) Limited traded(FTIL) , is the promoter of MCX holding 31.2 stake in MCX and is soon expected to get listed on exchanges. MCX consist of 15 members in its Board Of Directors, having one managing director, three representing promoters of FTIL, four nominated by FMC and one nominated from NABARD and SBI each. MCX faces a tough competition with other national level commodity exchanges in India, NCDEX, NMCE, ICEX, and ACE in terms of its product portfolio, enhanced technology, liquidity, transaction costs, uninterrupted execution and its transparency.

The Indian commodity market has shown a rapid growth in last few years with the commencement of electronic exchanges. Currently no trading facility is available for commodity options or indices. At present FII’s, mutual funds and banks are not allowed to trade in Indian commodity future market. Its average daily turnover has surged by 3.5 times from Rs. 14,900 crore to Rs. 51,400 crore. The Exchanges of Developed countries like CME, CBOT have witnessed an EBITDA margin of nearly 60% and a growth rate of 9-10% along with a P/E valuation of around 17-18x on CY12 earnings.

MCX tender a very low multiple in comparison to other exchanges as well as witnessing higher growth rate, offering attractive valuations. It’s a high cash generating company, free from debts, as well as a high dividend paying company offering dividend on continuous basis. Its net worth stood at Rs. 1,073.9 crore as on 31-12-2011. The current news is MCX is coming up with its IPO and will be available for trading in exchanges.