Multi Commodity Exchange of India Limited (MCX) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Multi Commodity Exchange of India Limited Q1 FY '22-'23 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. On the call we have today, Mr. P.S. Reddy, Managing Director and Chief Executive Officer; Mr. Manoj Jain, Chief Operating Officer; Mr. Satyajeet Bolar, Chief Financial Officer; Mr. Praveen D.G., Head, Investor Relations. I now hand the conference over to Mr. P.S. Reddy, Managing Director. Thank you, and over to you, sir.

Thank you. Good evening, everybody. Thank you for once again showing interest in the company and its growth story. As exchange this quarter, we have done relatively better in the light of whatever that has happened in the previous quarters. And options turnover has picked up substantially well. And for this quarter, it was about INR 19,500 crores. And in fact, in the month of July, you will be surprised, it's almost INR 27,400 crores. We are on a good growth path. And hopefully, we will be able to see sustained growth in these contracts. While these contracts we are trying to nurture and then bring in more participants. We would also be launching new contracts as and when we get the approvals from SEBI. I have nothing much to say because I do not want to take time in explaining this. Our results are out there. Many of the data points are already there. So I will keep it open for the participants to raise questions.

[Operator Instructions] The first question is from the line of Prashant Shah from RG Investments.

Good afternoon, sir. Am I audible?

Yes, sir, you are audible.

Since BSE has recently got the approvals for the EGRs, any update with respect to the same?

EGRs, we can get an approval, that's not an issue. At this point in time, we are still in the development of the technology platform. But nobody has started in trading because there are some GST-related issues are there. Unless that is resolved, interest will not be still growing in this. So let that GST issues be resolved. We are not in that sense, delayed.

The next question is from the line of Giriraj Daga from K M Visaria Family Trust.

Sir, I have 2 questions. First question on the pricing. So can you just remind us when was the last time when we have taken a price hike?

It was in 2018 and we have introduced pricing in options only in October 2021.

Yes. So I'm talking about the pricing in the futures only. So when do you see next pricing division [indiscernible] with authority approval we may be needing, and just give some comparison like BSE and NSE charges about like above INR 300 per INR 1 crore, and we are still at 210, 215. So any possibility that you are bridging that gap or will be giving some inflationary price hike given that 3, 4 years have gone past. So what are your thoughts there?

See, we are still in a developmental stage of our platform, okay? And the many new products are being brought in. We are looking forward to many algo players to join. For algo players, incrementally, even 1, 1 paisa increase also makes a difference, okay? And so going forward, you will see, as we go along, we will discuss, the concentration is increasing in the form of algo players and new algo players have joined. That is the reason why we are very conscious about it. Actually, they are looking forward for a reduction in the charges, okay? So I think I do not want to still be [indiscernible] at this point. I would like to stay cool there and increase the volumes and also increase the number of products that are being traded on the exchange.

Okay. Understood, sir. Just the academic part, you are free to increase prices, right, if you will require today?

Of course, we are free. We are free, but then we need to take all stakeholders into consideration.

Okay. My second question is on the TCS platform. So we are still continuing the profile mining from September onwards?

Well, there will be a delay in that. The delivery has happened by and large, but then a lot of bugs are there, that fixation is going on, bug fixation. And we need to give a clean mock run, okay? So that will take some time. So we have different alternative plans. I don't want to disclose them, but all alternative plans are being worked upon. That's the way it is. What I'm saying is with alternative plans, I mean, it's not going to be substantially delayed. That's the way it is. In another 3 months' time, we should able to close it. That's the way we are looking at it at this point in time.

Just to make [indiscernible] clear, so like last year, we had about INR 64 crores software support charges and product license fees. So let's in FY '24, margin in 3 months being may be probably 1 month, 2 months here or there. But in FY'24 these costs should be drastically down maybe INR 64 crores maybe INR 5 crores, INR 10 crores.

See, there are 2 aspects of it. One is the cost of it. So as a direct expense, that will be lower, but our depreciation will go up, okay? One line item may come down, another line item may go up. That's the way I'm seeing it.

I agree with you, but am I on right track in terms of numbers.

No, I did not go with any numbers because we are not giving as yet any numbers. But I can tell you it's substantially lower. That's all I can tell you that.

I'm not looking at TCS cost component. But whatever you are saying to the FT the erstwhile technology provider, that number will be 0, right?

Yes, that will be 0, obviously.

[Operator Instructions] The next question is from the line of Devesh Agarwal from IIFL Securities.

Firstly, sir, you spoke about [indiscernible] concentration increasing in the futures stream, so is that the reason despite our volumes are declining on a Y-o-Y basis, the tariffs are kind of coming up?

No, no. The average realization may be coming down because we have 2 tariff slabs and people fall under almost generally on the higher tariff.

Okay. So despite volume declining, the concentration is kind of going up.

Higher means. What I mean is when a slab one is a higher tariff and slab 2 is a lower tariff. So they're moving up the ladder. That's the way it is. So that is up to INR 350 crores is INR 260 and over INR 350 crores is INR 1.75 per lakh.

Right. And sir, if you could share the concentration or say, the top 10 traders, what would be the concentration in the overall volume?

Yes, it was about 48%. Now it has gone to 56% if I'm not mistaken. Top 10 is 67%.

67%. And how much this was last year?

For the entire year, it is 62%.

62%. Okay. And sir, what has been the revenue from options in the month and in the quarter?

Revenue is INR 27 crores.

INR 27 crores. And you spoke about, sir, technology migration, there has been 1 quarter delay. So now we are targeting somewhere in Jan this migration to happen.

That will not be Jan. This quarter only, I'm looking at it. Next quarter only I'm seeing it.

And in the meanwhile, we'll continue with the FT platform?

Well, we are looking at various options, including FT platform. That's the way I see it. We have 3, 4 options we have looked at, and we're working on all options simultaneously.

Okay. And by when sir, we will get clarity on this?

We should get in about 10 months' time. I mean, that's not an issue that TCS said that they will deliver by the end of August, complete suite. And this is what our bugs are there and all that. So we'll be able to give a clear mock to the market participants. We've already given mock in pieces, but some bugs were reported, those ones are being addressed.

Right. And a couple of accounting questions sir, what has been the MTM loss this year in this quarter?

When we went in May, in May, we had and May was a washout month because RBI increased rates in May, but June we recovered. And what we have done is we have moved from mutual funds because basically, our mark-to-market was not substantial because we have parked in ultra short-term and short-term funds and overnight. So we have now started moving to state development loans, which will be accounting under the amortized system. So that is the plan forward. So we have already started this. And during the month, after large year policies, will get better clarity. But the accounting for these instruments in our books will be under the amortized system. So we won't have any mark-to-mark on these instruments.

Understood. And sir, this time on taxation, like last year, you said that all the adjustments will be done in 4Q. Are we following the same practice or this year, we will be doing the adjustment as we go along?

No, we'll do it the same way, but I'm glad to tell you that we have taken a full mark credit. And so under the new regime, our effective tax is around 24% for the stand-alone and around 20% on a consolidated basis.

We've been able to completely utilize the MAT.

That's right.

The next question is from the line of Savi Jain from 2Point2 Capital.

Can you hear me?

Yes, we can.

First question was just a follow-up on the expenses for the new software. So you said that while the expense will go down, the depreciation will increase. But the sum total of both, will that be less than the total expense that we're incurring right now?

See, presently, there's a fixed charge as well as a variable charge which is linked to a transaction tariff.

Correct.

There's nothing linked to our transaction charges.

No, no. See, again, it means what higher the trading and higher the transaction review, correspondingly, you don't pay anything. So obviously, that will be less. There will be what we call a tipping point where our balancing point up to what turnover, both will be equal and up to what beyond which that one will remain the same. So that kind of thing will happen.

I understood that. But based on the current levels of ADT, we have seen the same levels will that expenses be similar or will it be lower. That appreciation plus the discharge, will it be lower than the current fixed [indiscernible]

Maybe somewhat lower.

Is there any update on the FDI participation? When do you think we can have them on the trading on the...

SEBI is dropping the regulations, once they are done, then they will release it. circular rather.

It's already announced by SEBI, that you are aware of it by the way?

Yes. Yes.

SEBI has announced it. Now they have to give the circular operationalizing it.

The next question is from the line of Amit Chandra from HDFC Securities.

So my question is on the options volume. So as you mentioned that the options volume has picked up significantly, but it's actually one of consequence to 95% or 90% crude oil as well as natural gas. And we are [indiscernible] on the Gold Mini contracts, but that is also not picking up, right? So from here on, what we can expect on the options side, whether it will be dominated by these 2 contracts or maybe other contract to start picking up so if you can throw some light on what we're going to build like the other contract? And also on the index options contract, which has been allowed by SEBI, so maybe you can tell when the contract will be launched and what kind of traction are you seeing in that?

Okay. See, currently, these 2 are the darlings of the market, crude oil and nat gas. So obviously, those 2 options are doing well. And in the case of gold, although Gold Mini was launched, the volume substantially because the ease in the main one seasonal gold. And these contracts, what we call these options will devolve into the underlying features. So the volume is also reflective of that underlying features volume. Gold mini [indiscernible] volume is also reflective of the underlying futures volume. We got SEBI's approval for launching monthly options in 1 kilo gold bar on the underlying bimonthly futures. Currently, gold 1 kilo is a bimonthly futures contract. So as a result, what will happen is the teller is reduced. So the premium will become almost will be halved. So that is the real thing that we are looking at it. We will be launching that product soon.

Okay. And sir, in terms of constitution of the options volume, if I see that in terms of the participation details that you have in the [indiscernible], yes. So am I audible now?

Yes.

Yes. So in terms of the participation details that you have given in the [indiscernible], so the client participation has increased substantially like Y-o-Y. And if I see the options contracts, is it fair to assume that options volume is largely being contributed by the retail clients and also in terms of the UCCs that we have seen it have increased significantly over the last 3 years, almost 4x, now around like INR 1 crore active UCCs are there. So out of that, how many would be trading options? And is it fair to assume that options is largely a retail participation that is there?

Okay. Yes. In terms of options, last year, we had a 1,72,900-odd [indiscernible] traded, In this first quarter alone, we have Q1, we have 190,500 traded. So the trend is really interesting. But if you look at it again, the corresponding Q1 of the last year, it's only 32,000, okay? So there's a huge, huge difference. So we are really doing well. Here, you must see option writers are by and large some proprietary accounting happening, but option, what we call buyers, whether put option or call option, they happen to be the retailers. That's what we are seeing that.

Okay. And so what you're saying is that how the actual UCC around like 1.5 lakh is only setting option. So there is still scope to increase the retail participation in options side if I'm correct in this?

Yes, yes. There is [indiscernible].

Okay. And also, sir, in terms of the options are, if I remember, you mentioned that options realization is around 1/3 of futures. But if I see based on my calculation, the options realization is coming at around 53% because the options premium to the options notionally is around 2.6%, which we saw earlier in it to be around 1.5%, 1.6%. So is it fair to assume that this is going to come down? Or is it going to remain at the level?

Okay. It all depends on whether options are traded near the near month or far away. If it is far away, obviously, the premium will be much smaller out of the money or in the money or at the money this kind of thing, and mostly, it is happening layer one or around that or in the money. As a result, you will see high premium is being paid. And as a result also, the retail is almost all I have seen the 48% to 50% it has come. But what we have calculated at that point in time is based on what was happening in MSC. That's what the calculations were. And fortunately, we proved to be wrong. So we are getting more on this one. But I'm not too sure whether that kind of spread will continue to be there. But even 40% is also there. That is also a good number.

That's great. Okay, sir. And so in terms of the technology that you mentioned that there can be some delays in that. So if I'm not wrong, the current on our agent is ended in September. And any extension there is not possible or in case you have to extend your do for 1 year. So are we planning to extend for 1 year or extension of 1 or 2 months [indiscernible] is not the case. So I like what are the alternative plans you have?

So that's what I'm saying. I will not be able to disclose all my -- what are all doing it because nobody should play spoil sport to jeopardize all those things. But we have -- one thing is for all the existing licenses of the existing platform, we have a sense, perpetual licenses. That means it may be for 60 years, 40 years, 30 years, et cetera. So license fees are all done. The only thing is when there is a problem, troubleshooting needed that is where the services will be requiring it. So this is one of the contingencies that we are looking at it, okay, approaching them to get their continued support for 3 to 6 months a year out, okay? That's what our request is going to be. And that's it. There are other plans also we are having.

The next question is from the line of Prayesh Jain from Motilal Oswal.

A few questions. Firstly, when do you plan to launch options on Indices?

Sorry.

When do you plan to launch options on indices?

[indiscernible] options on indices.

Option on indices. Okay. No, see, currently, except for [indiscernible], others are not doing well, okay? We need to allow the underlying futures contract. If you want to launch it, then we must have a vibrant futures and options contract. So we need to revise that. And Metal Dex has gone almost on nill because of the nickel debacle that has happened. Now we are opting for a different trading lot and then what we call delivery lot for the case of nickel. Once that nickel is permitted, then the trading interest will be coming, then we will revise this metal index futures contracts. So let us develop it first the underlying futures, then we will apply for those options.

Okay. And also recently, there was an allowance of FIIs being allowed to trade in commodities in India. How do you see this? And how do you see the benefit of this over the medium term?

I mean it should help us to improve the liquidity in the market. That's the way I look at it. There are 2, 3 things which I keep telling the other people also. For FIIs, somebody can see that, look, they can also go to maybe London or [indiscernible], why do they come to you? That is one question that people ask, but then the cash and carry arbitrage opportunities are available in the respective markets only, sitting there they can't enjoy that benefit. So there is an opportunity to participate in that, okay, in this market. Second, there are people who are currently maintaining or who may be trading one book in the international leg, another book in the domestic leg, et cetera. Now they don't need to maintain 2 different books and do anything of the trend. They can always trade in one single legal entity, okay? And the liquidity will increase in the exchange to that extent. That is what I'm saying.

Got that. Got that. And sir, the other [indiscernible] on electricity futures, when do you think we will launch that, any further developments?

Yes. I shouldn't be losing my patience on this, I think, yes, we are [indiscernible] of it. That's the way I can tell you that. There's no day goes without discussing electricity futures contract being allowed to be launched. We are waiting for the regulatory approvals. Hopefully, this quarter will happen. Let's see.

Okay, okay. And sir, my last question is on the TCS software again. What is the capital cost of? And how much kind of -- what is the kind of lifetime of that asset, but as the depreciation may be or 3 years. 4 years.

See, what -- our contract with TCS is 1 plus 5 years, okay? Then as far as the software useful or what you say is concerned, it's a lifetime as long as we continue to pay them the AMC. That is what this one is. So you just pay AMC, then keep using it, that's how it is.

And sir, what is the capital cost of it?

No, we are not disclosing it as yet, okay? We'll do that as an after maybe going live or something like that. I do not know when CFO would like it to be disclosed. But anyway, it will come in the books.

The next question is from the line of Lavanya Tottala from UBS.

Most of my questions were answered, but I just wanted to check on software support charges. So is this like the software charges are linked to option volumes that our revenue is linked to option premiums. I just wanted to check if...

I'm sorry, what is the software-related, I didn't understand.

Software support charges, which is higher in this quarter, wanted to check for reasons behind [Technical Difficulty].

See, it doesn't distinguish between options or futures, every rupee earned a certain percentage has to go to the software vendor. That's the way it is.

So it is on our fees, not just on the option ADVs, right?

Nothing to do with options. I mean, nothing to do with any of those tariffs that we structure for each product. If you don't charge anything, then they will also get lucky. But if you charge something, you have to pay out of it a certain percentage.

Okay. Okay. Got it. And on the staff cost, will it be the same run rate which we are having in the quarter 1, which is a bit higher...

It is partially higher because a lot of attrition is there in IT sector and other things, some kind of corrections are to be done. And some hiring also has taken place because this of the implementation and other things. But I think once the project goes live, maybe after 2, 3 quarters later, it may start taper off. I mean, you will see some kind of a downward trend, but not so much, but there will be some stability in that number.

Okay. Okay. Got it. And on the new product launches so other than the XD futures and other thing, what are the new products and new commodities that we are looking to launch in the near term, sir?

Look, approvals are pending. That is the whole issue, as I told you, approvals are pending. And there's no point in repeating the same thing every quarter-after-quarter because I'm waiting for those approvals. No response has been received. But this time, we are determined to get them to give [indiscernible] they want to reject them, let them say why they are reacting and when rejected, I have no problem about it. At least, some other products we can try. But once we get the product approval, then we have to launch it within certain period. So that, as I said that we will launch now gold options on the 1 kg contract, on bimonthly futures. So that is something which we will take it up in this quarter.

The next question is from the line of Nikhil Abhyankar from DAM Capital.

I wanted to do, what will be the effect of IIBX on our turnover? Will there be any substantial effect to us?

See, IIBX is promoted by all of 5 of us, and we all have equal 20% share. So now it is inaugurated and their tariffs are also announced. And our estimates suggest that it's going to do well. So... It's like that.

Okay. So you don't think it will directly impact our volumes?

You mean to say volumes, okay?

Yes.

In terms of volumes, I would see it will if at all there is an effect, it will be a positive effect. Because the guys who are importing the gold, they have to hedge that exposure also. So exchange is used for such kind of risk management.

Understood. Okay. And sir, you just spoke about the spot ex few years earlier. So we are planning to launch gold and, I think, coal spot ex earlier. So what do you think will be the opportunities as compared to the India's total consumption that will be traded on our platforms. What is the global average and where do we see going once we launch?

See, it is a more hypothetical question in that sense, people may have made those assessments.But the way that we looked at is especially coal for spot exchanges, the government has leased out mines, which are shut down and which are due to unviability in terms of public sector assessment. Now the private sector has picked up on a PPE model, they are going to produce coal. Now that is completely free from any kind of government sectors. They can sell it in the open markets. We were told, in fact, we have seen about 20 coal mines were auctioned when we went some conference. And there are about 120 or 100-plus at [indiscernible], which are still to be auctioned. So all that coal will come. Now while it is tightly controlled, currently, there is about 5% or so, it is coal traders are using it. Some captive mines are also there, they are also allowed to sell coal in the open market. So we are assessing all that. We don't need the entire Coal India production to come to us. They have commitments to various state government entities, they have to give it. So they may not come over there, but we are sure that this coal spot exchange will do well once it is permitted to be launched. This is one part of it. Second part of it is the gold part of it. While gold spot exchange is something that we all are waiting for. GST [indiscernible] not yet made it a viable option. So that's why everybody is holding back, even BSE said that 2 years ago, when MY announcement came by what [indiscernible] we launch whatever it be said and Akshaya Tritiya, nothing happened, because there are constraints, we understand that better than anybody else. Now If the gold spot exchange comes, maybe the synergies between MCX futures gold contracts and the spot will be much higher than anybody else because it supports each other ecosystem. And the margins and other things can be moved easily and people can take exposure in one under contract and [indiscernible] the other, et cetera. So I think we will not let that opportunity go but it's too early for us to apply. That's the reason we are weak.

Understood, sir. But one last question. Again, I just wanted to know what are the costs that we paid to CMA for the licensing of the underlying? And India has also got a spot gas exchange now through IGX. So is there any thought to move towards?

No, see, the one which we are creating in the WTI and gas is a entry have that is what the pricing is all about. Now we are paying to CME about USD2 million, that is a minimum. And if the turnover, say, approximately, let us say it is INR 16,000 crores, then there is a breakeven. But beyond that, we have to pay that incremental. So this quarter, we have paid extra to CME because the crude and NG have done well.

Understood.

Understood. Not understood?

Understood. And there's no thought of moving to IGX so that we can take there are any costs...

This is not as yet highly liquid or relative way that some of them currently it's happening, what we call the reporting kind of thing is happening. It's too early for us to say that [indiscernible] has moved over to the domestic platform, okay? Because there are states what they call, it's not under the GST purview, okay? Still VAT is ruling this energy market. So that is a challenge, and the transferring the gas or transporting gas from one consumer to the producer, et cetera, the entire pipeline is under the control of gains. Now unless that is separated, there won't be any safe pricing of it.

Understood, sir. And sir, is it safe to say that once we launch the gold exchange our futures and options underlying to it will be our own spot exchange and we'll be saving a certain amount of money for our licensing deal with LME?

I'm sorry, how is LME coming into the place...

I'm sorry. But sir, what is the underlying for our gold futures...

Our gold only, domestic prices We are not seeing anything to anybody.

[Operator Instructions] The next question is from the line of Sanketh Godha from Spark Capital.

Yes. Just wanted to understand this vital part a little better. So you said that maybe subsequent quarters is quite be relaunched. So merely got stuck if it comes back, whether it can potentially contribute the same amount of volume it used to contribute in the past month, that's the first one. Then I have a second one with respect to depreciation and taxes.

Are you talking about the nickel contract?

Yes, sir, nickel contract.

Okay. See, the nickel contract current its value is almost an INR 30 lakhs to INR 40 lakhs, okay? With a margin of 20%, it is too expensive for anybody to trade in this contract. So we have informed the SEBI. This is what the issue is and the investors are deserting this counter. So unless you do something about it, it will die natural death. So I mean, unless you have a strong merit in being a trading unit being different from the delivery unit. Now there, we don't see any merit in it. So I think that is something which they are considering it. And let us see if it happens, there's nothing like it.

Sir, you expect the margins to come down [indiscernible] so that the volumes will revise that. That's the way we are trying to.

That's it. Volume the very trading unit itself will be volatile what we are looking at it.

Okay. Sir, sir, you are looking for both the benefits, volumes are trading, you need price to come off and the margin on that amount to be lower...

It will be much lower. Yes, half this.

Okay. Okay, sir. Second question, sir, was more on [indiscernible] small number, the depreciation in the current quarter came relatively higher compared to what we reported in the fourth quarter FY '22, which was INR 2.7 crores, now INR 5.8 crores. So is it coming from change in our approach in calculating depreciation, which has led to the increase, is it [indiscernible]?

Not really, if you see our previous quarter June as well as till December, it is at the same run rate. But when we deluded in March, we decided that were certain assets which we could continue using. So that's why we reversed certain the certain depreciation amounts in March. That's why for the year as well as for the quarter, particularly for the quarter is a bit lower than the current quarter figure.

So this INR 5.8 crore kind of run rate is continue to remain for...

Yes, that's right.

Okay. And finally, on the tax rate, sir. Sir, you said 20% of the tax rate on consol number...

That's on a consolidated...

Yes, sorry. But...

For the stand-alone, it's around 24%.

Okay. Sir, on consolidated, it will remain at 20% only for the subsequent quarters after utilizing everything [indiscernible]

Yes, at least still I don't foresee any major change in March because whatever adjustments we do, we'll do it in the March quarter.

Okay. Okay. So sir, we can work with 20% tax rate, right?

On a consolidated basis.

The next question is from the line of Ravin Kurwa from ICICI Securities.

Sir, I have 2 questions. One was on the cost side. So is it fair to assume the employee expenses and the other expenses to remain at a similar rate for the remaining quarters of FY '23?

Yes. So there are a few senior level recruits that we have done in IT in this quarter. So I expect it to continue at this rate because we have also made provisions for in our HR cost. So the HR cost would continue. And when we compare the other expenses especially in March, in March, we have done certain reversals because the variable pay linked to the performance and all this. So when we came to March, we knew the exact figure, what we would be realizing that's why there are certain reversals done in March. If you compare it with the previous quarter, it is in the same run rate.

So in the beginning of the year, if the auditor say that you should probably do provision for the variable pay. So we do based on the budget rate. And actually, when what is the performance of the company, what are the individuals performance, we see that, then we will find that there is this year that this year means '21-'22, we deal perform as per the budgeted targets. So we have lowered it. So accordingly, that much is plowed back into the accounts.

[indiscernible] if our financial performance increases going forward, then we make a higher [indiscernible]

No, whatever we have provided it Is considered to be 100%. And if budgeted targets are achieved, this 100% will be paid out. And if budgeted targets are achieved only by 80%, let us say that 20% will be kept back in the account.

Okay. That's really helpful. And then secondly, on the [indiscernible] options side, what's the view on cannibalizing the future volumes or option volumes by launching that options contract?

Which one you're talking about?

Gold 1 kg bimonthly contract.

I don't think it will be cannibalized in it. I would say it will actually infuse further liquidity in that... It doesn't cannibalize can. The ones which are not to start coming into the system.

And sir, one more last question. Sir, if you can help us is there any active client database for the copper, so who have been actively trading for last 1 year, if you can see us for the futures and options.

Futures and options, 1 minute. Last year, we had 470,000, and that is for the financial year '21-'22, 471,000, you can take it, okay? And this quarter, 238,000 have traded.

[indiscernible] in the range of like 3% to 3.5%. So now what I just wanted to get your views on how we will be increasing the active portion of the active ratio for the clients? And how has it been historically in the past?

So, if you look at the corresponding quarter to last year, just at the beginning of the year, about 223,000 people have traded [indiscernible]. So as against 2,23,000, 2,38,000 have traded. That's almost how much? About 80%.

Yes. That's an increment, right.

Yes.

The next question is from the line of Sujit Jain from ASK Investments.

Sir, bank brokerages as a percentage of total turnover, how much that will be currently?

Yes. Currently, it's about INR 1,000 crores. Maybe it is 5% of it out of 25,000.

You have a similar number for options?

Options, 1 minute. I don't see that I have [indiscernible] available. I think this has not been taken...we should take.. Okay. That probably we will post it on the website when it is available in fact. So we'll generate it. We have not generated that.

Sure. So which means that there is a good amount of scope here in terms of business development activity in terms of active participation because I'm sure that they are participating on equation is much higher. So there is scope in terms of improvement. Isn't it?

Yes. I mean our focus has always been on this banking, they are more stable in that.

And all the issues related with bank brokerages being active on commodity bourses, I mean, their clients, their customers being active. Have they been addressed because I believe there were some issues related with [indiscernible] receipts, et cetera.

Not too sure about it, but then the KYC, what they are doing is currently, whoever they're admitting in the equities, they're uploading it on the commodities also. So that's why our KYCs have crossed INR 1 crore now, okay? Total KYCs. You'll see that probably [indiscernible]. So that is the way it is happening. But I will not be too happy with that kind of numbers. So if 1 crore, but even 50 lakhs is traded, that is good for me. That is so we wanted to mere uploading is not enough. We wanted them to activate it. And commodities is also peculiar thing because unlike in commodities, each of them are or most of them are delivery-based ones. The investors are slightly what we call reluctant to take any positions there. Now recently, in order to [indiscernible] these commodities, at least there will be interest in gold. So what we did was we asked some of the member brokers to take delivery across the country, gold 1 gram, 5 or 10, 8 and 100 grams, et cetera, from the exchange platform and delivery though what we call door step delivery is something which the vault managers have guaranteed, okay, and for some price, very normal in price. So with that, we are bringing these clients of equity markets into the ecosystem. We thought gold is easy to reach out to customers. Okay.

Okay. And the margins in futures, energy futures come down, do you think that the options turnover could shift back to futures?

It doesn't. Once we got used to it. Now in fact, we do prefer options than in the futures, that's what is happening, the ones who are actually looking at, the newcomers, they go from equities who are active traders. But there are potential commodity brokers. They are preferred futures than options. And the physical market players also prefer futures.

Right. So your effort with the regulator in terms of bringing down the margins in energy contracts in futures. If that materializes, you're saying overall ADTV of the exchange will go up combined...

It should. It should.

The next question is from the line of Sanjay Singh from PineBridge Investments.

Sir. I don't know how to put it, but have you benchmarked yourself in terms of costs with other exchanges, whether in India or [indiscernible] exchanges and [indiscernible]. The reason I'm asking this question is, if you see a cost, if you add up your employee cost ex costs, other expenses, even depreciation because some of the accounting will be different in different exchanges. And today, you have a cost of roughly around INR 220 crores, INR 210 crores on a base of slightly less than INR 400 crores revenue and for the lack of more information, if I compare to IEX, which has a similar size of INR 400 crores revenue, we have a cost structure of INR 80 crores. And we also had a similar tech arrangement earlier and what the software and not only charge depreciation and the total cost structure, including depreciation is INR 80 crores. Now of course, I don't know your business very well. But if you have benchmarked, [indiscernible] there is any opportunity to benchmark yourself with other exchanges and look at the cost structure with a fresh pair of eyes or do you think that there's any possibility to reduce the cost significantly from what it is currently today?

Yes. See, in fact, every quarter we place it before the Board and Audit Committee. The comparison of the NSE, BSE, IEX, LSDLC, CDXL, MXCDEX et cetera, okay? Even NSE doesn't compete with IEX in terms of EBITDA margins, IEX has 87%, NSE has 75%, but for BSE, it was maybe 1 quarter behind, yes, you do in March, okay, March to March is giving it. And our EBITDA margin is 53%, BSE's is 42%. Okay. And [indiscernible] is 58%, CDXL 69%. So MCDEX I'm not comparing it. Of course, they are not doing well. So that leaves us only BSE is only behind us. Others are doing relatively better. So because of our substantial technology costs, we are incurring some expenditures. Second, while our turnover is growing, our turnover related expenses have gone up because of that kind of what we call agreement with 63 [indiscernible]. Other costs, employee costs also partly increased because of the development of the new platform, we have to recruit more people in technology department. which we demonstrated earlier, but then it will also taper off gradually People will not have this exciting work in the exchange once the platform is developed, and it is going right. So probably some may leave also, we do not know. But we will not like to increase the headcount. So once it is frozen, as they go vacate maybe a lower designation person may be recruited. So coming back to these numbers, yes, we do the benchmarking with our domestic players.

Necessarily happening to know. And maybe I think the margin percentage is probably not wrong, but probably at the right way of looking at maybe the absolute cost because I mean even if you have turnover growth with 2 from here, a cost to not grow that such margin will increase. But the absolute cost of IEX being 1/3 almost of what you are doing correctly, and maybe you can explain detail some other time. But I'm not able to understand the technology roughly would be not fairly different who business development costs are going to be very different. We are other expensive part of it overheads. -- maybe you have some rehousing costs, which they don't have. But still, how can it be 3x more, I'm not too sure maybe there is some more details to it, which you can probably share some other time. But I think more detail is on the percentage margin, but absolutely cost which should be looked at, if you can maybe at some point of time, look at it and maybe...

I just said, see, we have multiple products. We have the development teams for doing all this. They are relations monopoly, okay? Hardly anybody is there and everybody goes there. And we have almost about 350 employees, and that's not the case with them and system expenses is another one. So that's our total cost as a percentage of operating revenue is 58% and IEX is 19%,okay? And in the case of NSE, it is 31%. BSE 74%. And I mean we need to compare not absolute figures. I don't think absolute figures is going to give us that those differences, number of employees, et cetera, et cetera.

Got it. Okay. And yes, I'm going probably pleasing wrong. Just other thing is I don't know much about it, but how is this launched? What will the IIBX do differently from what you are doing? Is it more about spot gold there? So if you can just explain the difference of what exactly IiBX will do compared to what you're doing. I know you're doing futures and options for gold, but does iIBX bring more spot, I'm not pretty sure right...

Yes, it is nothing but a spot exchange. Instead of going and then trading in London, maybe LBMA platform or somewhere, they would like that business to move over to India and start just domestic, but even other players also wanted other players also to come to India and trade on IIBX,ndit's purely a spot platform. okay? And it is a dollar-denominated contract. There will be no CTT, STT and no GST, et cetera, et cetera. And it will be held in the demat form. They don't worry about keeping the physical gold also. And whenever they want to bring in, they pay the custom duty and get it. That's it.

It's really heartening to see the volumes improve especially in options side and overall volumes in July compared to what we've seen till now.

Ladies and gentlemen, that would be the last question. I would now like to hand the conference over to Mr. P.S. Reddy for closing comments.

So thank you so much for giving us a patient hearing and listening and we always set our aim high and markets should also collaborate corporate with us then operation will be in [indiscernible]. And we will do everything to have this company doing good and doing well from quarter-on-quarter. Thank you. Thanks to you all.

On behalf of Multi Commodity Exchange of India Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.