The daily turnover on the country’s largest commodity exchange, MCX, hit a new high on last Wednesday at ₹1.81-lakh crore on the back of increasing proprietary trades and improved foreign portfolio investor participation in the crude oil options contract.
Of the overall trade, proprietary trade alone accounted for 57 per cent, or ₹1.04-lakh crore, and that of FPI was at ₹2,391 crore. The other category, which includes retail investors, touched ₹73,167 crore, while domestic institutions and hedgers were at ₹196 crore and ₹2,404 crore, respectively.
The turnover in cash-settled crude oil options contracts also touched a record high of ₹1.49-lakh crore, with proprietary trade accounting for the lion’s share of ₹81,348 crore and FPI’s at ₹1,709 crore, while that of other categories was ₹65,545 crore.
The trade on commodity derivatives exchanges has been shifting quickly from futures to options due to the lower cost of transactions. Among options contract, crude oil has hogged investors interest due to its lower contract value compared to gold.
Moreover, most of the brokerage firms have been attracting investments in crude options contract from Russia through proprietary trading and the FPI route, said an executive of a leading brokerage.
This apart, he said that with the stiff margin on futures trades, brokering houses are luring investors into options through speculative algo trades.
In fact, MCX turnover has been hitting a new high despite the bearish trend in both gold and crude oil prices. India has been buying Russian oil using rupees as Moscow has been shut out of the USD-denominated global payments system.
Russia’s accumulation of ₹
Russia has been accumulating about $1 billion worth of Indian rupees each month and is struggling to use it as they do not import much from India, said the CEO of a broking firm.
Some of this money is flowing into the commodity exchanges as the market regulator, SEBI, has eased regulations to attract FPI in the commodity trade, he added.
FPIs have to trade on commodity exchanges through custodians, and leading broking firms are pitching to attract traders and investors from Russia.