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

Hi, sir. This is Prayesh Jain, sir.

How are you, Jain? Someone in [indiscernible]?

Hi, Mr. Reddy. We are very well. How are you?

Good, good, good.

Hi, Mr. Reddy. Hi.

Yes.

Hi. So this is Prayesh Jain from Motilal Oswal. I understand this is an [ over the phone ] meeting for analysts. I'll just leave the floor open to you guys to discuss, and looking forward to more interactions with you guys.

So thank you.

Thank you. Thank you.

Thank you.

Bye.

So Mr. Reddy, thank you for taking the time to speak with us. It's nice to reconnect after a few months.

Yes.

I hope you haven't forgotten us. It's been, I think, a few months since we spoke.

No, no, no. I don't forget. I don't forget. Your faces are very familiar. And you have been staying investors in this company, and I appreciate that.

Thank you, sir, and we appreciate your leadership of the company. So in fact, on that topic, I wanted to start off by congratulating you for completing 3 years now as MD and CEO of MCX. And our journey with the exchange actually has also been for the last 2.5 years. So I remember first speaking to you when you had been -- you spent roughly 6 months into the role, and a lot of new exciting developments were anticipated, right? And I remember you spoke at length about your vision for the commodities market in India, new products, new participants. And some of that has come through. I think some of that is still in the works. But I remember our first conversation quite fondly.

Yes. Thank you. Yes, I mean, new products, getting them all approved and launching them, handholding them. And then one fine morning, SEBI suspends some -- mostly fuel kind of thing. I think this is a challenge for me. But in fact, we got CPO options. It was doing so well, the CPO futures, almost INR 300 crores, INR 350 crores. So we thought out the options will pick up. That's it. One fine morning, SEBI said that you have to discontinue that. And the whole option contract has gone now. First, you have to build now futures, and thereafter, you have to build options on it. Sorry. Go ahead. I'm sorry.

Yes. No, I think you're absolutely right. And not only for MCX, but I think for all exchanges, the regulator plays a very important role. So that is obviously something to be mindful of.

Sir, maybe just on that topic, I think, firstly, I wanted to understand from you, are you satisfied with the pace of the new product launches that have happened since you took over? There are many products which we were keenly anticipating. So for example, the electricity futures and options or indices, et cetera. And it seems like there have been some delays. So just wanted to understand your thoughts on what the bottlenecks could be? And can we anticipate any good news on that, let's say, over the next 6 to 12 months?

Yes. See, you're right that electricity futures is one important contract, which we have been struggling to get approvals. There is a joint working group, as I said, between the CERC and the SEBI. And unfortunately, even that regulators also, the CERC is slightly, what should I say, favoring the power exchange market over the spot exchange market. Now they did not give us permission, but they have launched what we call term-ahead contract, where the futures in electricity, smart electricity, forwards in electricity, they have launched it. Okay.

Yes. Those are [ Indian Energy Exchange ] contracts. Yes.

I'm sorry, IEX has launched it.

Correct, sir.

So they wanted them to foster that market to grow then let us see if something is left out for the futures market together. That is the way that they thought maybe. So we did not push much for our contract, but we have brought out these kind of anomalies. Obviously, you cannot hold us back and then make us run, okay, and compete. And this is not correct to do this. And I think SEBI has also realized it. They should be working on this faster than otherwise and clear the -- or help our futures. We have been asking for it for a long time. It should come in the next 2 months' time, is my expectation. Then other one is the steel TMT bars. For a long time, it is back and forth happening. Then the other day, I mean, one fine morning, we received a letter, you apply after 3 months. I don't know why we should apply after 3 months after spending 1 year in a cold storage kind of thing. And we have been giving so much of information on this steel TMT bar contract. So some are -- yes, in some of our launches are very successful and some are getting -- not moving as fast as we expected. The other part of it is the -- I mean, index options you are seeing it. Unfortunately, again, index options, index futures were doing well. We want a good amount of liquidity in the underlying products. Now gold ex was doing well. All of a sudden, nickel contracts, there's some problem in LME. And even the futures in nickel itself has gone -- volumes have gone to 0. And the nickel contracts, nickel futures -- nickel index futures has got a 25% [indiscernible] in this -- in the base metal index, what you call it. So as a result, the volumes have already almost all disappeared. They are in a [ lessened ] stage. We wanted to bring up, first, futures and then come with the options on indices. So unless that traction is seen, I don't think we will be able to build options on it.

Understood, sir. Well, thank you for that color. It's great that you expect the electricity futures to come through soon in a reasonable amount of time. The other big trend that we have obviously picked up on is that now options are increasingly becoming a large part of the overall volume, right? And we track this data on a monthly basis. I think for July, options have even surpassed futures, if I'm not mistaken, right? .

That's right.

And my understanding is that this is primarily driven by the margin profile, right? And the margin that was implemented by SEBI when they took it up to 100%. So just wanted to understand, is that the correct understanding? That's point number one. And point number 2 is, if you believe that this trend continues, right, that options keep gaining share and in some time end up cannibalizing the futures market, any thoughts on changing the pricing, or the commissions that we charge or the brokerage we charge? Because today, we charge lower brokerage or we -- at least we end up getting lower brokerage for the same ADTV on options compared to futures.

Yes. First and foremost thing is, the -- when margins and crude oil has been substantially increased, then the crude has started picking up, okay? And that's how we have seen a lot of traction. People who have visited the crude oil futures content have come back and then very vigorously trading rate. Having got used to trading in the crude options, then when we introduced in -- sometime in January the NGE options, they -- that also has picked up. Now energy options picked up not because there is underlying futures, there is a margin, higher margin. Once the market got used to it, as to how it will work, et cetera, et cetera, how do -- how they -- whenever the product trading patterns, then they realize, okay, this is the best way to go forward. So what I'm seeing is, while options start growing, no doubt about it, substantially growing, that's good for us. The underlying futures have not declined anything further, okay? It is almost all 26,000 crores ADT. And by and large, it is remaining the same way even in the futures. Probably, if the margins come down in futures, even that may also be activated. That is the way I look at it, rather than cannibalizing one other, okay? This is one part of it. The second thing is whether the tariffs can be increased, or whether transaction fees that we are charging, whether we can increase it. We just introduced options tariff falling from 1st of October last year. Now we thought -- I mean, we didn't expect there's so much of growth in less than 1 year, okay, and we got so much. Now currently, it is yielding about 48%. Earlier, I said at 1/3. But now, it is almost all 48% is what we are seeing revenue growth from options coming. That means if futures contribute INR 1, then option contribute 48 paise. That's the way I'm seeing it. This -- we will continue to see this kind of volumes. And I do not want to disturb this tariff structure at this point in time, primarily for 2 reasons. Algos are also playing in this. And for them, it also matters a lot what we are charging. And actually, they are demanding that on futures, we must reduce our tariff. And even if we reduce by INR 45, that makes a great difference, is the way that they are projecting it. But I'm not too sure. A bird in hand is worth two in bush. So once you reduce it, and then later on, if you want to experiment to increase it, but then it will not happen, okay? So that's why we have retained as it is. I don't want to get into that controversy, actually, I would say. And it may impact some other smaller players also. I mean, we seem to be favoring only big players, but not the smaller players who are paying the lower slab -- not slow -- higher slab tariff. So I think it is noncontroversial to be at this point when we are going and then requesting for development of the market and asking them to contribute more and more. So I would not like to touch this at this point in time.

Got it, sir. And it is a very important point, which was going to be my next question, right? So that's all 100% margin that was implemented on crude. I mean nowhere in the world, I think, are you expected to give 100% margin, right? So -- and we understand why it happened, right, because of the negative crude oil pricing. But do you -- so we were hoping that this would be a temporary sort of increase. And as the market settles down or normalizes, this would go back to what it used to be earlier? Any thoughts on that, sir? Any discussions you've had with the regulator with respect to that?

Yes. Now they have scheduled meeting of RMRC, it's regulatory -- or Risk Management and Review Committee, Risk Management Review Committee, sometime in August end. So before then, they are going all these matters, including SGF-related contribution.

I see. Okay. Understood. Because, I mean, quite frankly, at 100% margin, it basically means there is no -- there is no leverage, right? Like there is -- it's comparable as buying in cash, yes?

No, no. Currently, it is about 30% plus, 33% for crude oil.

Okay. So they have brought it down from 100% to 33%?

I'm sorry?

They have brought it down to 33%?

No, no. It was, at one time, and no. When it is going into the expiry [ mode ], another 25% gets levied. So that means it is 35%, plus another 25%, that is the way it is at this point in time. And when the volatility was high, it went up to even 100% also.

Right. Right. Okay.

But when we restored trading post to what we call negative pricing, and in the passage of time, the volatility margin impact on the initial margins are also reduced gradually. So that is the reason why it has currently stayed at 35% around.

Understood. Got it. So I have one more question, and then I'll hand over to my colleague, Aman, who has some more questions for you. We have been also speaking about the spot exchanges now, the coal exchange and the gold exchange for some time. And I know that for -- I think, for the gold exchange, you have a partnership with various other exchanges, including the NFC. Any time lines on both those spot exchanges?

I will tell you, for the domestic gold exchange, we do not have any tie-up with anybody, okay? We have tie-up with International Bullion Exchange, which was inaugurated on last Friday. So here, we are 5 of us are there. And then now, it's a matter of operations now, that exchange. So that will do well. That's what our confidence level is. And there's only 1 exchange. And all the gold that is coming into the country may likely routed to this because the transaction charges are substantially lower when you receive via canalizing agencies versus the exchange route, point number one. Number two, government also has considered that whatever MOUs that is signed with the Dubai government free trade for import of gold about 100 tonnes, they can import first year, 125 tonnes next year kind of thing, but that all will be routed through this platform, okay? That is a -- so it's a guaranteed kind of thing. Because there, the tariff is lower, maybe 1% or something like that, and that helps transactions to kick in immediately. So that is one part of it. Coming back to the domestic exchange spot exchange, we don't have any such engagement with any exchange. And we are holding up this particular thing, primarily for 2 reasons. One is that we need to have a trading platform, which now we have given that discernment to TCS. TCS says once this is done and stable platform becomes this [ CDP ], I'll pick up a copy and then make necessary changes and then deploy it. And we are also not under pressure to do this because the GST issue continues to hold it back. Other exchanges will -- it is already -- they have a platform of their own. They do -- have not launched it because, yes, it's a nonstarter without GST issue being resolved. So not to worry on that part of is my way of looking at things.

And for coal, sir? Any update on coal?

Sorry?

On coal?

Coal spot exchange, yes. In fact, last week only, the Ministry of Coal has called all stakeholders on the designing regulations on how it should be, et cetera, et cetera. We have been pitching for ourselves and Mjunction jointly to -- for a coal spot exchange. So they are planning to come out with regulations by end of December, I suppose. And then actually, there will be a selection criteria for exchanges, I mean, who can be. And they are likely to be only 1 exchange, not so much business for multiple exchanges. And I think both Mjunction and we are well poised to beat that 1 exchange.

Understood, sir. Thank you. Aman, please go ahead.

Sorry, I was on mute. Sir, I want to check on this futures ADTV, which has come down substantially in the last 8 to 12 quarters. In your view, is there a chance to pick up? Because it has -- the trend is -- as you said, it's stable. But from a trend perspective, it has not gone up substantially. So is there any trigger that we can foresee in the future, which will make this futures ADTV start picking up again?

So in terms of ADTV, yes, the volumes have come down. The prices have gone up, that's why we are continuing to see that kind of transaction revenue. On the volume front, one is that the domestic is just -- is something that we are targeting about, and more and more players to come. That is one important thing for us to have them on board. In multiple delivery centers, some of them are saying that is the reason for our answer to -- for less participation. The way that they are seeing is because there are multiple delivery centers and the buyer is not sure where he is going to get the delivery from. And that adds an element of uncertainty. And it's an egg-chicken for me, in that sense. If I go on and speak in the market, people say that I need delivery at my doorstep. You give me delivery up north and then I'm down south, then what do I do about it, yes? So please have multiple delivery centers and people will get used to it. And it worked well. That is the way I've seen it. Multiple delivery. If you see the aluminium, I mean, it is substantial growth, ADTV. Have you seen that -- if you see that ADTV in aluminium, I will tell you, in 2021, it is 11,000 metric tons and '21, '22 is 26,800 metric tons, okay? So why did it happen? We moved our delivery center from Thane, which is primarily to receive imports and then all port to competition. We have moved it to -- our delivery center to Raipur. Now as I said in the past, Raipur is much closer to the, what we call, manufacturing belt because the eastern belt is the major -- this one source of ore aluminium. More important is NALCO is one which is really delivering it, okay? They just want to sell it. That's all. They are not worried about brand building, price around it, et cetera. And we have disturbed the play of some of the other guys who wants to add some premium over their brands, et cetera. And that's all gone. Now today, I mean, recently, I went very recently with -- it means last week, I was with the MD of a very big producer. Then he says that, "Mr. Reddy, we are only taking your prices and then see -- I mean, we are pricing it based on your price." And then if the LME price is higher, they will take that. And if the MCX price is higher, they will take the MCX price. That's the way they are doing it, and then they're making money. So -- but why don't you use the platform to deliver the metal is what we have been asking. But still, there is some resistance, not at the MD level. MD said we should make this happen, take this platform and an opportunity sent for us, God-sent opportunity. And whenever there is the price difference and we are not able to sell it to any private players, then you just simply dump it on the exchange. And that is happening. Then comes to the copper. Yes. There is -- in copper, there is 44,000 in 2021; '21-'22, 34,000. There's 10,000 metric tons deceleration. There's some decline. And lagged 18,000 in 2021 and 12,000 in '21-'22. So other than this aluminium, yes, rest of the metals, there is most of them are imported, okay? We have written to these Japanese zinc and copper manufacturers, okay? Now why we have written to them is, the zinc, especially copper, for example, with 1.5 metric tons, they are currently, what we call, have about 1.8 or about 2 metric tons bundles they are making it. And the LME standard specifies that you must have so much that. So they are afraid of making a brand, making the delivery lot in the way that it is required by us, thinking that, that may be violating the LME standard. Because we are seeing LME-approved metals are acceptable. That doesn't mean -- we saw the clarification from LME. LME said that we have no problem if they cater to you in whichever bundle or size you wanted. But this is as long as quality is of the same thing, what they are approved, that is fine. So -- and the metal comes from the same plant, that is fine. That's what -- they have given a clarification, which we sent it a cost. Probably we will see some participation from those known producers. Apart from it, we have also seen another interest -- interesting trend is emerging. Not that I want the war between Russia and Ukraine to continue, but that has thrown some surprises, okay? Now the Russian manufactures, RUSAL and others, they are looking at it, whether we can trade on the MCX. Okay. Probably they are facing sanctions in LME or maybe in CME. And even for crude also, there is a, whatever, Rosnfet (sic) [ Rosneft ] or something. There's -- they are also...

Rosneft.

Rosneft, yes.

Yes.

They are also -- they have a Delhi office. They are engaging with us, so how they can actually look at this. So the point I'm making is, I mean, nothing has happened as yet. But you know there are new opportunities that are going up.

Got it. very helpful, sir. Sir, when you look at the fact that everything else went down in futures cadence, except for crude, despite the fact prices went up for all commodities. Is there a specific reason for this trend? Only crude is growing and everything else is not growing, at least on a quarter 1 numbers basis. I mean just -- if you can help us understand, this will be very helpful.

Honestly, I will not be able to say quarter-on-quarter, which will dry water down [ at the well ], no?

That's interesting.

And all that I can say is we should fire on all cylinders. So see where we can all grow [ mutual ] products and growth potential. We would like to work towards that. That's the way I see.

Okay. Just from your perspective, between futures and options, you are fine either of them grows. I mean, of course, both should grow. But if options grows faster, substantially faster than futures, for whatever reason, it doesn't keep the pace, you are okay with that, right? It's not a preference.

As long as the futures doesn't contract, okay, that's fine. Instead of growing at 20% or 10%, may grow it at 5%, it's fine. But if options are growing, that's also good for me.

Yes. Got it. Got it. Just quickly on the -- this other income, the mark-to-market decline, maybe you can just throw some light on that, the reason for this -- not decline, the lesser amount that we had in quarter 1 versus what we had in previous quarters. It looks like a quarterly Q-on-Q and Y-on-Y decline. Can you help us understand the reason for that?

And also, I guess, before that, if you could just shed some light on your entire treasury book. So how much is the treasury book today? How much of that is your free cash versus, let's say, the margin cash from brokers and how you've invested that?

We have around INR 1,100 crores of our own net worth money. In addition, we have around INR 600 crores in line with CCS, which is a margin money, which they deploy -- as per the SEBI regulation, they can deploy only liquid schemes as well as overnight scheme as well in fixed deposits. So that's where they placed them. So our investments are mainly in mutual funds as well as in perpetual bonds, and we have some investments in ETFs, Bharat bonds and Nippon. So when that -- so -- and excepting for the perpetual bonds, all of them are marked -- accounted under mark-to-market. So that was the biggest hit. The reason for the hit is because it's accounted on a mark-to-market. So when the RBI increased rates in May, the entire portfolio, I mean, we took -- the entire debt mutual fund scheme, we took a big hit, though we were in -- while we anticipated the increase, we had passed the funds in short term as well as in ultra-short-term funds. But I mean, the market being what it is, we took a hit while -- because we had moved to ultra-short term and short term, it was not substantial. But obviously, there was a hit. We recovered in June. And now we have started moving to -- as I mentioned during the call, to SDL. So we have started investing in state development loan paper. We have made a big name, and we also account -- accounted under the amortized scheme. Even if the interest rates further goes up, we won't have any mark-to-mark since they're going to account it under the amortized scheme.

Got it.

And Mr. Bolar, is it fair to assume that on the INR 1,700 crores, roughly, we are making -- like what kind of pretax yield will we be making there?

And so for June, it was -- I mean, nothing to talk about.

Yes. But that's an anomaly. What I'm saying on a normalized basis, assuming rates don't move, what kind of yield are we expecting?

Yes. So see, for example, now we have started investing in SDL, and we have invested at 7-plus -- 7.7, right? So that yield is going to remain, Okay. But the entire portfolio, I will not be able to get at 7.7. But the fresh ones that I'm investing, it will be at the -- it will be -- the yield would be constant.

So on a blended basis, is it fair to assume like between 6.5% to 7%, something of that sort?

Yes. Hopefully, if we're able -- if we move smartly in this month after the RBI policy and deploy the way we should, I think the fresh investments should carry more than that.

Got it. Got it.

Sir, also on the employee cost, I think this is another cost element as well. Employee costs, I think you [ stated ] about on the call yesterday that the current number is more representative of like the going-ahead run rate. Is that a fair thing to say? Or is that -- is the scope of increase or decrease from here on, at least, on a -- is this a normalized cost that is currently appearing in quarter 1 number on employee side?

[indiscernible] because we made provision for the variable pay as well as for the increments based on the budgetary figures that have been -- when we compare it with March, since the budget we had taken for April, May, June -- I'm sorry, June, September and December were taken at as to the budget. And when we came to December, so we have a formal -- when we came to March, we can -- we realize the actual versus the budgeted figure, and then we reversed certain excess amount that we had provided for. So this figure should hold good.

Okay. This won't be substantially lower than this, I would assume, except for the reversal...

Unless -- we are hopeful we will meet targets, so there won't be any reversal of the variable pay. Hopefully, we'll meet targets. So if we meet them, there shouldn't be any reversals in March.

Got it. Got it. Sir, I mean then 1 broader question on just the mix of -- between both futures and options, where there's a lot of the energy focus right now. Do you see any risk if the prices change substantially of the crude or natural gas, do you think that will change anything to do with our daily turnover on volumes on the crude and natural gas side?

I don't think so because volatility is the -- what you call, the game here. If the prices keep moving up and down, up and down, then more and more trading will take place. So I don't think that even if a falling trend, still that becomes falling, okay, and there is volatility. So that's not an issue at all.

Okay. So that is not an issue. And given natural gas, it's become such a large portion now. Do you think that -- I don't know, will I still -- can participate in the same segment or not? I think you talked about GAIL pipeline being an issue yesterday. Can you just elaborate on that, sir, please?

See, what I was saying is the domestic gas is still factored, okay? Now IEX, as I understand, this gas is being transported using the -- some tanks, et cetera, et cetera. Now there's no pipeline, unless the pipeline route is -- route freed up, okay? And there is just what you call a separation from GAIL. And like you have done for electricity distribution, you have a, what we call, national load distribution center, something like that. So the -- like if you have an independent agencies then there will not be any vested interest in that sense. They will not be controlling it, the pipelines. Then the consumers are -- you sure are getting them -- the gas transported. This is one part of it. Second thing is GSTs is needed for this kind of thing. Because, currently, value, that is something which is implemented, it is different for different states. So when trading takes place, and our people are not aware of it, this kind of problem is there, at the end of it. We'll get from whom and what kind of tax you will end up paying it. It is something which is very uncertain. In the case of IEX, the IGX -- that is only -- I mean for the time being, they are getting traded. But unless the -- unless the pipeline is separated from the consumer or others who are interested in managing that, I don't think there will be a fair way of doing it.

But is that just the way to do that? Will it be a positive for us or for IGX if the pipeline gets separated?

What is it?

If the pipeline gets separated from GAIL, will there be a positive for us or for IGX or for both?

Well, see, then we can look at moving into the domestic market also, well, if the pipeline is, what we call, freed-up distribution.

Got it, sir. Right now, all our volumes are largely international. They're not domestic in nature at all on the gas side.

Sorry?

On the gas futures and options, the volumes are largely international, right?

On CME prices.

On CME price. Okay. CME. Got it. And sir, on software side, can you throw some light on the new time lines you mentioned, 2, 3 months of delay on the software, the CDP? So what's happening on that front?

Yes, there is a delivery delay because they have delivered the system, but a lot of bugs are there. That is where your time is spent substantially. And at TCS' [ conference ], we should be able to fix it by end of August, okay? And middle of September, some more core and noncore kind of distribution, they have done it. And by the end of September, noncore also will be delivered after all fixes, then we can go for continuous [ mock run ] and all that. So it's a matter of another 2 months more extra beyond September is needed. So we have [ recruited ] 63 Moons, seeking extension of their services. And also, we have other plans also lined up. And let us see how -- but it's not good to disclose all the other plans overall.

Sure, sir. And sir, from a cost perspective, currently, the cost, I think last year was about INR 54 crores, right, in FY '22, for what we paid to 63 Moons?

It is approximate because it varies on the international transaction fees, too.

Okay. Yes.

So if we do well, then a part of it will go to them also. Currently, it's about INR 55 crores, INR 56 crores.

Current rate basis currently?

[ INR 56 crores ], yes.

Sir, can you talk about how much will that come down by, I mean, to the extent you can discuss and disclose?

No. See, I can't. All that I can say is that, obviously, it will come to 0.

Yes, net cost will be 0, correct.

That's what's aggregate 63 Moons. Then how much we will pay to [ TCS ] also, there will be no additional cost for 1 year because that's -- we have cost, I mean, our warranty period [ clear up ] [indiscernible]. And all put together, I mean, again, we believe it will go under depreciation over maybe next 5 years, 8 years, you will be doing that. And the license is also, in essence, perpetual. As long as you keep paying AMC, then the license can -- will survive. So there's no problem in that also. And I think you will start seeing it. Once we tell you that we are, what we call, depreciation in over 8 years. So next year, you see 1/8 of it, then you can make it of what is the total cost.

Got it, sir. And sir, on the cost side, the CapEx that is supposed to be incurred, is it already incurred completely? Or is it supposed to -- further, there's some payout remaining to these years?

No. I mean, still to be incurred. I mean, hardware, by and large, this is done, isn't it? Hardware, by and large, it is done. Software costs are still to be incurred.

Okay.

Hardware as well as on the operating software, they're purchased, so that is done.

Got it.

Easiest part is.

I mean, that will still be a meaningful part. TCS part will be a meaningful part that we pay out then the warranty, at least. That suitability is displayed and the acceptance test is done.

Yes, it is. But I mean, it is reasonably big in that sense.

Got it. Got it, sir. I think these are the [ questions ] list I have. And so any question if you also want to add on?

Yes. Sir, maybe one last question from my end, which is -- see, you've also heard about this FDI participation potentially being allowed in the commodities market, right? And I guess there are 2 schools of thought here. One is if you look at the equities market and draw a parallel, I mean, FDIs play a huge role, right? I think 25% of market cap is owned by FDI, as they are an even larger proportion of the e-trading. But the difference there is that the FDIs are participating in equities because those equities are only traded in India, right? Like if they want to buy Reliance, it's only listed in India, as an example, which is not true in MCX's case, right? I mean, the FDIs have the option of trading commodities overseas. So just wanted to understand from you, sir, how should we think about the long-term opportunity here? And in your opinion, what is the likelihood that FDIs will actually place material trades on the exchange?

Okay. You're absolutely right. In fact, this is what I -- in the past, also in the analyst call, I have answered, asking them whether -- since other markets are already there, whether CME or LME or wherever they want to go, they would trade there, why do they come to you, okay? So the first and foremost thing is we -- if somebody wants to take advantage of cash and carry forward, our cash-and-carry arbitrage opportunities, they will have to come only here because there -- here also exists cash-and-carry arbitrage opportunities. So in whichever market, it is there, then they will go. And we have also presented that kind of opportunities. So to that extent, they can exploit that. That's number one. Number two, I think when MCX, rather, the commodities are under the regulatory regime of FMC and earlier, there's a lot of international trade was taking place with domestic brokers, et cetera, et cetera. All have got stopped for whatever may be the reason, okay? Maybe they have to maintain 2 books, okay? And that is -- may not be officially they are doing it, but then they are otherwise doing it. Now they can do it officially via an FI route -- and they can do trading in LME. And I mean, arbitrage opportunities in terms of the trade there, trade here and then bridge the price gap or whatever, they are able to do that using that. And still, they will have only 1 book, and for the purpose of income tax, et cetera, they will not face any problems. This is another big opportunity. In fact, when I visited a lot of brokers in the past, they say that no, no, we have shut down their business, you know, international arbitrage thing. Because we are not allowed to do it and how long can we carry this tension on all that. Now they can do it officially using 1 and single entity, okay? This is one. Then the third opportunity is, some of these -- some of these exporters -- exporters, not domestic exporters, but are import -- our import into the people who are exporting to India, they have an exposure to Indian prices, okay? That kind of contracts are also in place. So they would like to hedge their exposure with Indian -- in the market without their registering themselves in India, have a registered office in India, et cetera. I mean, good old days. There is a foreign, what they call, EFEs, eligible foreign entities. They should have an exposure in India, they should have an office, et cetera, et cetera. All that is not required. So who -- those have an exposure to Indian markets, they can hedge in India.

Got it. Got it. Sir, one last question I had, just to add on. I think when you look at the growth in UCCs, we have had very encouraging growth in the last many quarters. It has continued. At the same time, the share of top 10 traders has also increased. What is the -- on the one hand, the market is dipping. On the other hand, it is getting concentrated for MCX. So can you help us understand why is that happening?

See, the top 10 brokers are majorly algo players, okay? And who algo players are joining, obviously, the concentration will increase. That is true in any other equity exchange also, okay? And -- but when it comes to the retail investors, we don't go by the number of registered INR 1 crores less. Because when brokers are admitting a new client, they're also uploading the UCCs on the MCX. And -- so as and when the client wants to trade, then they will be able to offer them. We actually -- you need to see how many active UCCs which are traded. That is a very moderate growth, not a spiraling growth.

So sir, were you seeing then that -- sorry, go ahead.

Yes. Just curious, what would that number be, sir? Or how many of our UCCs are active on a quarterly basis?

So if we take the last quarter Q1 -- Q1 '22, '23, both futures and options put together, we were having something about 2 lakhs 38,000.

2 lakhs 38,000.

Corresponding to look at, it was about 2 lakhs 23,000. So there has been -- put -- yes -- both corresponding and compared to the corresponding period. Significantly, we can see that significant growth has come from options.

And how many of these 2 lakhs 38,000 are trading only futures today?

So futures alone, if you look at it, it is like we have 1 lakh 61,000. Okay, that is what this quarter. Compared to the pre-corresponding quarter, it was 2 lakhs 11,000.

So 1 lakh 60,000 of 2 lakhs 38,000 are only doing futures, is that what you're saying?

No. 1 lakh 61,000 is -- anyway you can -- because it is some people would have been trading in both futures and options. But you can see that it's not like options means futures -- removal of futures, number of futures. That means the people who are trading futures will not result in options. In fact, there are people who are trading in both futures and options. Option alone, I'll give you the numbers so that you will get a better picture. Option alone, last quarter, we have done 1.19 lakh. Compared to corresponding quarter, it was 32,500, around 32,500.

Understood. Got it.

Sir, are you -- do you think this futures -- seems like the numbers that you just highlighted, it seems like the number of active investors on the futures side have come down. Is that something also that we should like think about? Is there a reason for that?

That has come down only in the, what you call, energy, okay? You see -- if you see in energy, we had -- Q1 of last year 1 lakhs 1,200 odd. And now the corresponding Q1, 41,000 -- or 42,000 is there.

Okay.

But if you see the same thing as of crude oil, it has gone to 1 lakh 3,000 options, natural gas, 49,000. So there's a lot of shift in the investors' preference for trading in the options.

Right. Okay. Got it, sir. That's super helpful. That's super helpful. Thank you so much for the explanation and patient hearing. Thank you. Thanks so much.

Thank you so much, sir. Sir, I have one last question to make. Both Aman and I are visiting Mumbai at end of August. And as part of our research process, one of the things we love doing is just meeting management team in their offices in person. So we have already sent a request. I think maybe you would have received it, but we would love an opportunity to just visit you in the offices and just share lunch with you and maybe meet you.

Sure. Most welcome. Most welcome.

Thank you, sir.

Pleasure to see you. Please come.

We look forward to it. Thank you so much, sir. Thank you to everyone.

Thank you.

You sent the mail to whom?

I think we sent the request through IR, sir?

Okay. So please process it and block my time from -- all seniors, most of all. Thank you.

Thank you.

Thank you, sir.

Thanks for [ being here ].

Thank you. Take care.

Bye.