Must get commodity market regulator permission to start trading
Bombay Stock Exchange, one of the leading exchanges, has received capital market regulator Sebi-approval to launch its commodity exchange. The stock exchange has to now apply with the commodity market regulator, Forward Markets Commission, for its permission.
Last October, the board of directors of BSE approved a proposal for foray into the commodity exchange business and papers were filed with Sebi.
Once launched, BSE would be the seventh company to enter the commodity space dominated by MCX and NCDEX. At present, there are four commodity exchanges including National Multi Commodity Exchange and Kotak Group-owned ACE Commodity and Derivatives Exchange besides six regional exchanges.
Two other exchanges — Reliance Capital and IndiaBulls Group promoted Indian Commodity Exchange and United Commodity Exchange — have suspended operations recently due to various reasons.
The number of commodity exchanges in India has halved to 10 as most regional exchanges had to shut shop after they failed to meet minimum networth requirement of ?100 crore.
The entry of BSE, which is the Asia’s largest stock exchange in terms of number of listed companies, is expected to give a formidable competition to MCX.
BSE’s immediate rival NSE owns 15 per cent stake in NCDEX which commands prominent position in attracting trade in agriculture commodities. Set up in 1875, BSE has over 5,500 companies listed and total market capitalisation of over ?97 lakh crore.
Making a humble beginning of functioning under banyan trees, BSE has now emerged as one of the world’s most technologically advanced exchanges and has attained a response time of 200 micro-seconds for trades executed on its platform.
Fresh trading interest
Presently, BSE handles 500,000 orders in a second at the response time of 200 micro seconds. There are over 2.6 crore investors registered on BSE.
The entry of a new entity in the commodity market may draw fresh trading interest with new members registering and bringing in a different perspective to shore up volumes.
In the September quarter, BSE registered 45 per cent increase in net profit at ?45 crore against ?31 crore logged in the same period last year.
The exchange’s income was 26 per cent at ?142 crore (?113 crore).