Multi Commodity Exchange (MCX) on Tuesday increased transaction charges for non-agri commodities by 25 per cent.
Multi Commodity Exchange (MCX) on Tuesday increased transaction charges for non-agri commodities by 25 per cent. According to brokerage firm Edelweiss, the move will increase the company’s transaction revenue 20 per cent plus and consequently boost earnings as well. The commodity exchange has revised transaction charges for non-agri commodities to Rs 2.6 per lakh (from Rs 2.1 per lakh) for turnover less than Rs 350 crore and to Rs 1.75 per lakh (from Rs 1.4 per lakh) for turnover above Rs 350 crore with effect from October 2016. Earlier, on an average, the company earned Rs 1.7-1.8 per lakh transaction charge, which will now jump by 20 per cent plus.
The brokerage house believes the hike will boost MCX’s 2016-17 and 2017-18 transaction revenue by 7 per cent and 16 per cent and earnings by 8 per cent and 19 per cent, respectively.
Regulatory arbitrage between equity and commodity exchanges is anticipated to narrow (albeit in a phased manner) following FMC’s merger with the market regulator Securities and Exchange Board of India (Sebi). In this backdrop, Edelweiss expects institutional participation to provide the much needed depth to markets and introduction of options to be permitted, which in turn will support volumes.
After the hike in transaction fee by MCX, Edelweiss maintained ‘Buy’ rating on shares of the commodity exchange with a target price of Rs 1,352. On Tuesday, shares of the company closed 7.41 per cent up at Rs 1,151.