Jignesh Shah of MCX: ‘India matches US in banking infrastructure’

by Dave

The Bombay Stock Exchange in India.

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It (the MCX-NYSE deal) is more than a commercial deal. It is a symbol of strength. They have a heritage and a huge size, but still they have the pace and the agility that match our own DNA of speed and innovation Whatever we do, we like to do in the fastest and the best way. (NB – How Indian traders operate). We don’t merely want to be India’s best. They selected us because our parameters matched.”

NYSE has picked up stake in a market that can only grow further.

There are 140 agri-commodities and 1,400 industrial commodities in India and MCX is set to trade in all of them. In the last few years, Indians are allowed to trade in the commodities and currency markets. India already has a well-developed equity market.

It is governmental interference in markets, with price controls and export restrictions, that threaten food security.

MCX is more about metals and energy. MCX’s 10 per cent trading is in agricultural products and this is being criticized for issues related to food security.

“But,” argues Shah, “markets are trading minuscule components of the physical agri-market. We hardly trade in agri products. Of our total volume, agri industry volume is about 10 per cent. Ours is largely a metals and energy market: where prices are almost same globally. Gold will cost you the same almost everywhere.”

MCX’s competitor — the Multi-Commodity Derivatives Exchange — does derivatives trading and they are big time into agri products. But Shah defends them and his company.

Trading in agri-products offers insurance against market volatility. MCDX is serving the utility of the insurance. If you are part of a global economy — which we are now — and want to insure our farmers against the ups and downs of prices, then you go and buy options from our exchanges.