Market, Products & Portfolios The Exchange Contribution

Transcription

1 Market, Products & Portfolios The Exchange Contribution i Shivanshu Mehta, MCX 11 th India International Gold Convention th September, 2014

2 Commodities as an Asset Class Portfolio Benefit Commodities are an unique asset class that can provide valuable diversification benefits to an investment portfolio. Used in combination with traditional assets like stocks and bonds, they can potentially reduce overall portfolio long term risk while increasing upside potential. The historically low correlation between commodities and financial assets means that commodities may perform well in neutral or negative years for stocks or bonds. Hedge against Inflation Global Underlying Broadly difficult to manipulate 9/16/2014 2

3 Portfolio Diversification Risk & Returns Portfolio Distribution Parameters Criteria Nifty Bond Gold Silver Annualized Annualized Sharpe Returns (%) Volatility (%) Ratio (%) 1 Without 100% 20.1% 21.9% 57% Commodity 2 80% 20% 17.5% 17.5% 57% 3 With Commodity 40% 20% 40% 17.6% 14.0% 73% 4 30% 20% 30% 20% 18.5% 15.8% 69% Period Considered: Jan 2009 Dec 2013

4 MCX Overview MCX commenced operations on November 10, 2003 Largest and only listed commodity exchange in India 84.89% market share FY Average daily turnover in FY2014: INR 278 billion Highest daily turnover of INR 1, billion achieved on April 15, 2013 Bullion market share of 99.46% in FY Extensive reach: members, operations through h 476,000+ terminals including CTCL across over 1900 cities and towns across India Globally, 10 th Largest commodity futures exchange in terms of number of contracts traded during CY -13 (source: FIA survey 2013) Won the FOW Award for its Gold Petal Futures contract under the most innovative new contract launched by an exchange in the metals category at the FOW Awards for Asia 2012 organized at Singapore

5 MCX GOLD PRODUCT OFFERING

6 MCX Gold Portfolio GOLD Gold Regular Ahmedabad Gold Mini Gold Guinea Gold Petal Ahmedabad Ahmedabad Mumbai Gold Petal Delhi Quote 10 gms Quote 10 gms Quote 8 gms Quote 1 gm Quote 1 gm Lot Size 1 Kg Lot Size 100 gms Lot Size 8 gms Lot Size 1 gm Lot Size 1 gm +/ Rs. 100/tick +/ Rs. 10/tick +/ Rs. 1/tick +/ Rs. 1/tick +/ Rs. 1/tick All gold contracts are deliverable contracts with wide choice of denominations for market ktparticipants i t Ideal for Hedgers as they account for domestic premia/discounts/duties/levies

7 GLOBAL F&O VOLUME BY CATEGORY

8 Global Scenario Source: FIA Study

9 FIA Annual Volume Survey 2013 Number of contracts traded Source: FIA Study

10 MCX : Creating Retail Penetration in Bullion Bullion Futures established as a retail investment/trade product across length & breath of India from 2003 onwards Presence of MCX terminals at more than 7000 locations (by postal codes) More than Authorised Persons (Franchisees of Members) More than 2100 Members terminals Extensive commodity awareness programsacrossacross country along with various physical associations/our members Daily Unique Client Codes trading(fy 14): Silver 26000, Gold India s first exchange to have a successful Gold coin contract In the backdrop of CAD related measures, es, Exchange traded instruments ts in place of physical form is a suitable option

11 Benchmark Price & Quality Transparency Quality benchmark: All LBMA approved Bars & coins with tamper proof packing MCXPrice has become a benchmark for value chain and end users alike (India as Price giver) Reflects ground reality including premium/discount of Spot market Most Jewellery buyers across the country demand MCX price reference Convenience & Assurance of Delivery Hedging: Most leading Bullion value chain players across India actively hedge/deliver on MCX This is because our contracts are ideally suited for hedging Revival of Deliveries: MCX Gold August Contract had highest delivery over the last one year (post CTT): 1110 kgs

12 Way Forward Ear to Market Continuous Product innovation Financial Inclusion Current tax structure being non uniform, hampering freedom of movement across states Inter state movement VAT benefit is lost, hence requirement of GST Lack of PMS in commodity Markets Managed Funds FCRA amendment: New products: Options and Indices and wider participant profile: FII, MF, banks having exposure for themselves and their clients would be able to hedge in domestic exchanges

13 THANK YOU