New Era of Options trading ringing bell at MCX

SEBI chief U.K Sinha met the finance ministry officers to

discuss the measure to strengthen the commodity markets. This
includes launching of new products namely commodity options
and commodity exchanges.
What changes can we expect to see?
To take commodities derivatives market to the level of
securities market
To introduce new products and new categories of market
participants in the space.
To introduce options trading in the commodity future segment
Allowing banks, mutual funds, AIFs, foreign hedgers in the space
Single licence for commodity and equity brokers
The products of the commodity exchanges are widely divided into two categories- agri and
non-agri. The agri products include sugar, soya, rice etc., and the non-agri commodities
include precious metal like gold and silver along with crude and other base metals like
copper, nickel etc.
The Indian commodity market is dominated by the multi commodity exchange which has a
market share of 85 per cent. MCX has a professional management which runs the day to day
operations and is all set to gain from the new trust given by the SEBI to broaden the
commodity segment. There has been a positive change in the fundamentals as they have
announced a 24 per cent increase in the transaction cost. Transaction costs amounting to a
total of Rs 203 crore revenue for the company in the financial year 2016. A 24 per cent
increment will lead to additional revenue of more than Rs 50 crore, as generation of more
revenue is expected to be generated as option trading starts by the end of the third quarter.
MCX share price has outperformed the benchmark index of NSE, as it has gone up by 25 per
cent in this financial year compared to a 10 per cent jump in the Nifty share price.

Interestingly there are further challenges as BSE is waiting for a nod to setup a commodity
exchange and NSE also has a subsidiary company NCDEX that runs a commodity exchange
which is a market leader in agri commodity trading.
However going forwards as the market depth and the liquidity increases, MCX has room and
the first mover advantage to capitalize in the growing option space.
MCX is one of the Top 500 shares indentified by Dynamic Levels. Dynamic Levels has the
best methodology of filtering the best stocks with a combination of fundamental and
technical analysis which brings out the strongest stocks that can best return in the future.
MCX share price has touched a 52 week high of Rs 1,202.50 in todays session by rising
2.43 per cent intraday.

Disclaimer
The investment advice or guidance provided by way of recommendations, reports or other ways are solely the personal views of the
research team. Users are advised to use the data for the purpose of information and rely on their own judgment while making
investment decision.
Dynamic Equities Pvt. Ltd - SEBI Investment Advisory Reg. No.: INA300002022

Disclosure
Dynamic Equities Pvt. Ltd. is a member of NSE, BSE, MCX SX and a DP with NSDL & CDSL. It is also engaged in Investment Advisory
Services and Portfolio Management Services. Dynamic Commodities Pvt. Ltd., associate company, is a member of MCX & NCDEX. We
declare that our activities were neither suspended nor we have defaulted with any stock exchange authority with whom we are
registered. SEBI, Exchanges and Depositories have conducted the routine inspection and based on their observations have issued
advise letters or levied minor penalty on for certain operational deviations.
Answers to the Best of our knowledge and belief of Dynamic/ its Associates/ Research Analyst: DYNAMIC/its Associates/ Research
Analyst/ his Relative:

Do not have any financial interest / any actual/beneficial ownership in the subject company.
Do not have any other material conflict of interest at the time of publication of the research report
Have not received any compensation from the subject company in the past twelve months
Have not managed or co-managed public offering of securities for the subject company.
Have not received any compensation for brokerage services or any products / services or any compensation or other benefits
from the subject company, nor engaged in market making activity for the subject company
Have not served as an officer, director or employee of the subject company

Article Written by
Nabarupa Kanjilal