Multi Commodity Exchange of India Ltd. intends to invest up to 200 crore rupees (equivalent to 21 million US dollars) to create trading platforms specializing in coal and minerals. This move aligns with the government's initiative to open these sectors to enhance transparency and improve price determination mechanisms in the Indian domestic market.
Managing Director Praveen Rai stated in an interview that India's largest commodity exchange is seeking the necessary licenses to launch coal and mineral exchanges. According to regulatory filings, the company has already established separate divisions to handle these two types of operations.
Last week in Mumbai, the securities market regulator Securities and Exchange Board of India approved MCX's plan to invest about 100 crore rupees in each of the new ventures. However, additional permissions from the Coal Controller Organisation and the Indian Bureau of Mines are required to complete the process, as they are the relevant licensing authorities.
Following this announcement, MCX shares rose by 3.1 percent, reaching 3022.50 rupees on Tuesday, marking its largest single-day gain since August 12. As of the close of trading this year, the company's shares have increased by 32 percent.
Rai noted that despite India being a major producer of coal and minerals, prices for them on the domestic market are often set abroad, emphasizing that this is a 'real political imperative for the government.'
The government has released rules for commodity exchanges allowing trade in coal, iron ore, bauxite, and other minerals. Buyers and sellers will be permitted to enter into physical supply contracts through centralized electronic platforms, which will ensure a more transparent pricing system and increase supply chain efficiency.
Prime Minister Narendra Modi's government has launched a portal for applying for licenses for new coal exchanges, and a portal for the mineral exchange market will soon be available. The first exchanges in each segment are expected to commence operations in the financial year starting April 1.
Currently, the majority of MCX's business comes from trading derivative instruments on gold and energy. According to the quarterly earnings presentation ending June 30, precious metals accounted for over half of the exchange's daily turnover. The energy sector, including oil, gas, and electricity, provided about 40 percent.
Rai expressed confidence in the growth of all these segments, stating: 'Each of these segments will grow. As an exchange truly focused on commodity markets, we want to play a strong role in the future development of these markets.'