Trading interest waned in Indian exchanges in 2012. Trading value in exchange traded commodity and currency derivatives as well as in equities traded in cash segment stagnated or moved lower last year.
Equity derivative volumes on the National Stock Exchange, that is the dominant exchange in this segment, declined marginally. But the Bombay Stock Exchange made rapid gains in traded value in equity derivatives, thanks to its newly launched liquidity enhancement programme.
Commodities and currencies lacklustre
Unlike 2011, commodity trading did not appear to enthuse the Indian trading fraternity. MCX, which enjoys about 85 per cent market share in commodity trading, recorded 12 per cent increase in the number of contracts traded.
But the value of trading was unchanged in 2012 over the previous year.
The correction in international bullion prices and non-trending movement in other commodities could have led to this stagnation.
Volatility in rupee against other currencies has not helped exchange traded currency futures either.
Volumes measured in traded value in this segment declined 10 per cent.
Equity volumes wane
The Reserve Bank of India imposing restraints on these instruments to control currency speculation could have taken a toll in these instruments.
Value of cash transactions in Indian stock exchanges has been moving on a downward trajectory since 2011.
The combined cash market turnover of the BSE and the NSE in 2012 was almost flat over the previous year, despite a revival in trading interest in mid and small-cap stocks. BSE recorded a sharper 13 per cent decline while NSE gained 3 per cent in volumes.
Combined value of trades of BSE and NSE in the equity derivative segment increased 16 per cent in 2012 over the previous year. But the increase was almost entirely due to the BSE’s liquidity enhancement scheme that resulted in the volume on the exchange going up multi-fold.
Volumes measured in contracts traded, declined 6 per cent on the NSE and traded value declined around 4 per cent.
The trend in volume on Indian exchanges is in line with global exchanges, according to the data disseminated by the World Federation of Exchanges for the first 11 months of 2012.
Index futures favourite
The WFE compiles these numbers based on inputs given by its member exchanges. This data reveal that value of equity shares traded between January and November 2012 is down 21 per cent over the same period in 2011. Turnover in single stock futures and options and index options has also declined sharply while index futures have recorded increase in volumes.
Global traders have also not preferred commodity derivatives last year. The segment that has witnessed almost doubling of volumes is the exchange traded interest rate options. These instruments are the fastest growing asset class, accounting for more than half of the derivative volumes globally.