The Multi Commodity Exchange (MCX) shares traded in red on Monday as traders reacted to dismal quarterly earnings (Q2) reported by the commodity derivatives exchange over the weekend. MCX reported a sharp decline in topline and net earnings in September quarter as trading volumes dipped by nearly a half compared with the same period last year.
After opening the session in red, Multi Commodity Exchange of India Ltd (MCX) rallied as much as 7% in intraday trade before ending the session at Rs 481.5, up Rs 0.5 or 0.1%. MCX shares have lost 67% of its value this year even as it has almost doubled from its August lows.
Multi Commodity Exchange reported a 38% drop in y-o-y operating revenue in the September quarter to Rs 81.2 crore and its net earnings plunged 67% to Rs 27.1 crore compared with last year. As a result, the earnings per share (EPS) declined by more than Rs 10 to Rs 5.3 y-o-y.
The earnings were also impacted by the new guidelines on the Settlement Guarantee Fund (SGF) by commodity market regulator Forward Market Commission (FMC) that demands 5% of the gross revenue be apportioned to the SGF. For the latest quarter, MCX earmarked R13.2 crore to SGF.
While traders acknowledged that a Rs 5,600-crore scam at the group entity NSEL (National Spot Exchange) did impact trading on the exchange, the fall in earnings was largely attributed to the introduction of the commodity transaction tax (CTT) and imposition of an additional margin of 5% on trading on commodities like gold, silver, crude oil and copper in the month of September.
“Even as commodity brokers had turned conservative in their dealings with all Financial Technologies India Ltd (FTIL)-promoted exchanges, the fall in MCX trading activity was largely due to higher cost burden,” said a trader.
MCX data show the average trading volume in three months to September 2013 fell to 6.7 lakh contracts compared with 12.6 lakh contracts last year. The average turnover during the period dipped to Rs 25,939 crore from Rs 28,745 in July. During the same period, rival NCDEX saw a 1% dip in its average turnover to Rs 3,089 crore.