The Mumbai based Multi Commodity Exchange (MCX) is one of the dynamic new exchanges that have appeared in the last decade. Set up to harness India’s rapidly growing economic power, in a few short years it has established itself as one of the world’s busiest commodity exchanges.
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The Multi Commodity Exchange was founded in 2003 by Financial Technologies (India) Ltd., with the aim of becoming India’s primary commodity exchange. Not only has it succeeded in this aim – at recent estimates commanding 80% of India’s futures market – but it has also become one of the world’s most successful exchanges. Recent figures show that it is challenging for the position of the world’s primary precious metals exchange, being no.1 in the world for silver, and no. 2 for gold. It is also highly rated for industrial metal commodities and energy commodities, being no. 2 in the world for copper and natural gas, and no. 3 for aluminium, zinc and crude oil. It also has a wide range of agricultural commodities available for trading, many of them essential to the Indian market. With plans existing to add yet more commodities to its list of products, it is certain that the Multi Commodity Exchange will continue its drive to be recognised as one of the world’s pre-eminent commodity exchanges.
There are four types of membership of the Multi Commodity Exchange, each having their own specific rights and responsibilities:
- Trading Member (TM): Trading members of the Multi Commodity Exchange may trade on behalf of themselves and clients, but may not clear such trades: this has to be done by members with clearing privileges. Individuals, partnerships, trading organisations and Hindu Undivided Families (HUFs) are eligible for this grade of membership. Applicants must also have a minimum net worth: Rs.10 Lakh in the case of private individuals, RS.25 Lakh in the case of organisations.
- Professional Clearing Member (PCM): these members have the right to trade, and to clear their trades and those of clients through MCX’s clearing house. Any company or similar organisation is eligible for PCM membership, though financial institutions and banks are most common. Minimum net worth is RS.500 Lakh.
- Trading-cum-Clearing Member (TCM): these members have the right to trade on the exchange and to clear those trades, but cannot clear the trades of others. Available to individuals, partnerships, associations, co-operatives, companies, banks, financial institutions and Hindu United Families (HUFs). Minimum net worth for applicants is Rs.75 Lakh.
- Institutional Trading-cum-Clearing Member (ITCM): these members have the same rights as standard TCMs, with the additional ability to be able to appoint subsidiary organisations and individuals as traders (though the ITCM will have to clear these trades). Membership of this type is generally only available to larger organisations and institutions such as commodity brokers or brokerages, commodity exchanges, stock exchanges, co-operatives and the like.
Though primarily concentrating on metal commodities and energy commodities, the Multi Commodity Exchange hosts trading in a wide range of products, many of them newer commodities reflective of India’s growing economic power. Commodity trading in India is helping to power the transformation of the country into a multi-faceted modern economy, and the list of products traded at MCX reflects this.
The commodities traded on the Multi Commodity Exchange are:
- Agricultural Commodities: Almond, Barley, Cardamon, Chana, Coriander, Corn, Guar Seed, Kapas, Kapasia Khalli, Melted Menthol Flakes, Mentha Oil, Palm Oil, Potatoes, Rubber, Soybeans, Soya Oil, Turmeric, Wheat.
- Energy Commodities: Aviation Turbine Fuel, Brent Crude Oil, Electricity, Gasoline, Heating Oil, Imported Thermal Coal, Natural Gas.
- Environmental Commodities: Carbon Emissions.
- Industrial Metal Commodities: Aluminium, Copper, Lead, Mild Steel, Nickel, Tin, Zinc.
- Precious Metal Commodities: Gold, Platinum, Silver.
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