Multi Commodity Exchange of India

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The Multi Commodity Exchange of India (MCX) is India's largest derivatives and commodities exchange. The exchange was the first marketplace to go public in India with an IPO in February 2012. 
Launched in 2003, MCX offers futures and options contracts on base and precious metals, energies and agricultural commodities. 
According to the annual Futures Industry Association's survey of the world's derivatives exchanges in 2021, the Multi Commodity Exchange of India was ranked 22nd by volume, with 176.8 million contracts traded on the exchange, down 19.97 percent from the previous year.
== Background ==
The MCX was launched in November 2003 by Financial Technologies (India) Ltd (FTIL), a financial services software firm which secured one of the four licenses offered when the Indian government ended a longstanding ban on commodities exchanges in 2002. It has since grown more rapidly than its two main domestic rivals, National Multi-Commodity Exchange (NMCE) and National Commodity and Derivatives Exchange (NCDEX), and is now the market's leading derivatives exchange.
The company went public in February 2012, garnering much attention with its stock rising 26 percent over its issue price. It was subscribed over 54 times. 
Financial Technologies had been the largest shareholder in the exchange but its top executives were deemed "not fit and proper" to run any exchange in India in December 2013. (See "Trouble at MCX" below) Financial Technologies initially held at 64 percent stake in MCX but wound that down to 26 percent by 2013. When regulators cracked down on the firm, it was forced to reduce its stake to less than 2 percent by the end of 2013. 
Other founding shareholders included State Bank of India, Union Bank of India and HDFC Bank. 
An affiliate of Fidelity acquired a 9.24 percent stake in February 2006 for $49 million, and Citigroup and Merrill Lynch each bought a 5 percent holding in September 2007. NYSE Euronext took a 5 percent stake in the exchange in June 2008. It held a 4.73 percent stake in September 2013 but sold almost all of it off in the fourth quarter of 2013.
Other early shareholders included: National Bank for Agriculture and Rural Development (NABARD), the National Stock Exchange of India (in which FTIL held a 1 percent stake), Union Bank of India, Canara Bank, Bank of India, Bank of Baroda, HDFC Bank and SBI Life Insurance, Passport Capital and GLG Partners. The company has fostered product development with a dozen alliance partners, including the London Metal Exchange, the New York Mercantile Exchange and the Tokyo Commodity Exchange. 
MCX holds a 49 percent stake in the Dubai Gold & Commodities Exchange, where Jignesh Shah is listed as vice chairman.
==Trouble at MCX==
In December of 2013, the board of MCX asked Financial Technologies of India to cut its holding in the exchange from 26 percent to 2 percent after India's regulator, Forward Markets Commission, said it was unfit to own a controlling stake. The move by the regulator stemmed from a payment default by an MCX subsidiary called the National Spot Exchange Ltd. in October 2013. Police seized property and shares worth $487 million from exchange officials and defaulters in the investigation.
Financial Technologies' chairman Jignesh Shah, and former managing directors Joseph Massey and Shreekant Javalgekar were prohibited by regulators from holding any position at the exchange. Shah was jailed for more than 100 days in connection with a payment scam that involved a spot exchange he launched called the National Spot Exchange Limited.
In 2013, shares in Financial Technologies plunged 68 percent after July 31, 2013 when regulators suspended trading in most commodities contracts at the exchange. A flurry of news reports said that other markets were interested in buying stakes in MCX including a partnership stake by United Stock Exchange and the Bombay Bullion Association. Another report sited the Universal Commodities Exchange as a potential merger partner with MCX.
Total foreign institutional investment holdings in MCX fell dramatically in Q4 of 2013, during the exchange's regulatory actions to 25.23 percent, from 37.9 percent, while non-institutional investors rose to 34.5 percent from 21.9 percent. 
In April of 2016, it was reported that CME Group planned to take a 15 percent stake in MCX, following the Indian government’s decision to increase foreign holding in Indian commodity exchanges to 15 per cent from five per cent. Currently, a single investor cannot own more than 15 per cent in a commodity exchange. CME had placed a non-binding bid in 2014 when Financial Technologies had to sell its 26 percent stake in MCX, an unnamed source was quoted as saying.
== Business Model and Product Development ==
The MCX operates its own clearinghouse and had 1,381 members at March 31, 2007, introducing a fourth membership class in October 2007. The MCX listed futures in 58 commodities as of Nov. 14, 2007, focused on metals, energy and agricultural products. In terms of the number of contracts traded, MCX claims to rank no. 1 in silver, no. 2 in gold and no. 3 in crude oil, copper, zinc and natural gas, based on data published on the respective Web sites of competitive exchanges.
Natural gas futures were launched in July 2006, potato futures in September 2006, and coffee futures in January 2007. MCX also has attracted volume in trading kapas, soya oil, cardamom, and menthol oil. On Oct. 6, 2008, MCX Stock Exchange (MCX – SX), a subsidiary of MCX, announced the launch of currency futures in Mumbai. Live trading began on the MCX-SX platform at 9 a.m. on Oct. 7, 2009.
MCX launched India's first electricity futures on Jan. 9, 2009. The contracts are weekly and monthly. They trade in units of 24 megawatt hours; the tick size is 1 rupee per megawatt hour.
In October of 2017, MCX launched an options contract on gold with Gold (1 Kg) futures as the underlying. The launch, which occurred on the first day of the Diwali festival, was part of an effort by the Indian government and SEBI to develop commodity derivatives markets in India.
In 2018, the exchange was granted recognition by regulators of the Multi Commodity Exchange Clearing Corporation Limited, as a wholly owned subsidiary of MCX. The exchange also launched options on crude oil, silver, copper and zinc as well as the firt ever brass futures contract. The exchange also launched the Thomson Reuters MCX India Commodity Indices with plans to introduce contracts on them.
==Key people==
*P.S. Reddy, Managing Director and Chief Executive Officer
*Manoj Jain, Chief Operating Officer
*Satyajeet Bolar, Chief Financial Officer
== Contract Volume ==
Year	Total Annual Volume*	Percent Change
2021	176,883,766 	(-) 19.97%
2020	221,016,837 	(-) 28.03%
2019	307,095,652 	33.1%
2018	230,339,630 	15.97%
2017	198,614,562 	(-) 19%
2016	245,077,515 	13.3%
2015	216,346,961 	61.8%
2014	133,751,848 	(-) 49.5%
2013	264,627,693 	(-) 72.4%
2012	959,613,240 	(-) 19.8%
2011	1,196,322,051 	10.6%
2010	1,081,813,643 	180.7%
2009	385,447,281 	--
==History==
* On June 1, 2010, MCX launched the lead mini futures contract. The contract mirrors the full-sized 5-ton lead futures contract, but is sized at 1 ton. 
* On May 24, 2010, MCX launched a zinc mini futures contract. The contract mirrors the full-sized 5-ton zinc contract on MCX but is sized at 1 ton. 
* On April 15, 2010, MCX-SX announced it had completed its regulatory compliance the shareholder structure of the exchange. MCX-SX announced its shareholders at that time, notably, IFCI Limited as the largest shareholder with a 13.23 percent stake, Union Bank of India with 11.5 percent and Punjab National Bank with 9.2 percent. 
* On January 14, 2010, parent company Financial Technologies (India) Ltd announced that MCX had migrated its trading and clearing platforms to the next version of its DOME trading platform, and CnS, its clearing and settlement technology. 
MCX announced on October 17, 2009, that it had reduced members' transaction fees from four Indian Rupees per 100,000 rupees of turnover to 2.5 rupees, eliminating the previous incremental system of fees. MCX officials expect the new charges to cut members' trading costs by around 50%.
== References ==
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Category:Exchanges
Category:Asian Exchanges
Category:India