Shares of Multi Commodity Exchange of India (MCX) surged on Wednesday after reports suggested that the Securities and Exchange Board of India (SEBI) is exploring steps to expand institutional participation in commodity derivatives. The stock climbed as much as 4.34% to Rs 7,985 apiece on the BSE, making it one of the notable gainers in the market.
The rally followed comments made by SEBI Chairman Tuhin Kanta Pandey during an event hosted by MCX. Pandey revealed that the regulator is weighing the possibility of enabling banks and pension funds to directly participate in the commodities market.
Moreover, SEBI is considering allowing foreign portfolio investors (FPIs) to trade in non-agriculture commodities.
If allowed, this will be a major change in India’s commodities landscape by facilitating greater involvement of institutions and liquidity. This is an important development in line with global commodity markets, which are centered on institutional players.
In India’s commodity derivatives market, MCX currently holds a leading 90% market share by offering contracts across bullion, energy, base metals, and agricultural products. As the country's largest commodity exchange, it stands to benefit directly from regulatory changes impacting the breadth of market participants.
If banks and pension funds decide to enter the space, trading volume may increase significantly, which may enhance MCX's revenue streams.
The presence of FPIs, if added to non-agricultural commodities, would help expand international participation and global integration of India's commodity markets.
Investors responded rapidly to the news, sending MCX shares higher in Wednesday's session. The stock was trading up 4.49% to Rs 7,990 by 11:58 AM on NSE, reflecting positivity about the exchange's growth outlook with the regulatory changes.
Market watchers noted that MCX historically reacts quite strongly to regulatory developments, with reforms often sparking significant movements in its share price. It is believed that the expected rise in participation of institutions is a long-term positive for both liquidity and profitability.
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According to analysts, SEBI's plans could be a game-changer for the country’s commodity landscape. Institutional involvement will both deepen the market and add credibility, transparency, and efficiency to the price discovery process. For MCX, this could mean further growth, improved trading activity, and greater investor confidence.
Experts are also advising that the regulatory process will take time to be approved, as detailed frameworks and risk safeguards must be developed before implementation.