(Disclosure:I am market making in the shares of BSE)
Asia’s oldest stock exchange BSE will soon make a foray into commodity trading. A proposal to start a new platform for commodities trading was approved by the BSE board on October 20, said two sources familiar with the development.
BSE’s rival in equity trading, the National Stock Exchange (NSE), already has a presence in the commodity segment through a stake in National Commodity & Derivatives Exchange. Bourses such as BSE entering commodity trading are eyeing the passage of Forwards Contract Regulations Act (FCRA) that could boost trading volumes as it allows launch of further derivative products in the segment.
Earlier this year, the Kotak Group bought a 15% stake in the Multi Commodity Exchange (MCX). While the FCRA Bill was tabled in Parliament last year, the previous government did not pass it in the wake of a major scam at spot exchange NSEL. Despite the severe crisis post the NSEL scam, MCX still dominates commodity trading in India with close to 80 % market share-from ET