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

[Audio Gap] regulations that have come supportive of driving volume on the commodity exchange. We don't see that sort of volume in the numbers yet. So if you sort of tell us just a few 2, 3 things -- is it reason why or what is needed really to have the volume sort of come on these exchanges and into the numbers, because the regulation seems to be in favor, but there is something seem to be missing to run up to this.

So recent development or related development, whatever happened, in fact, most of them were in favor of options compared to the futures. Like sometime in 2020, peak margin reporting has come. I think it has been equally been interviewed in the equity markets if [indiscernible]. That has impacted our volumes, particularly the futures volume partly because, leverage what the booker earlier used to give -- some brokers used to give out, not everyone. They used to give some leverage to their client for intraday operation. So that with the introduction of the peak margin reporting that has completely gone back. Now every broker has to ensure complete collection of the margin, upfront before any trade. So more leverage, so it is like a compulsion of bringing in the adequate margins. Second, the markets -- commodities markets are -- we all know that it operates till very late evening. So given that for any retail individual or a retail client, it is very difficult to bring the margins in between, because -- depending upon the [ international ] price movement, always there could be a possibility that there could be new request for the margins -- additional margins, because we have different types of margins. One is related to the volatility-based margin. So even if markets are very active, so whenever any volatility -- spurt in volatility or anything happens, automatically, the margins will also go correction accordingly. That is one reason the client retail they prefer coming to the options because you have to just put the premium. That means as a buyer, we just pay the premium and take it, and we will not have to get involved into the day-to-day margin actually. Unlike it's been writing an option. So some set of market participants, the preferred future over option -- sorry, options for our future. And that is the reason you could see there is a tremendous progress that has been witnessed in the options contract compared to the futures. So there has been a marginal drop. And the question is, if you ask, is it cannibalizing into the future? Definitely not, at least only marginal turnover has come down in futures compared to the growth that we have -- what we have witnessed into the options. So that way, it is like a good performance, excellent performance in option compared to a marginal drop that was witnessed in the futures contract. So it's not only in terms of turnover, you can even look at the participation. Participation i.e. company if you look overall exchange level, there has been a growth. And particularly in options, you can see very good growth that has happened in the last 2, 3 quarters. So one reason, like I said, it is because of the peak margin reporting. Second, we have a regulation which says that historically we have to do that first stress test analysis. And based on stress test numbers, you have to look at the adequacy of your Settlement Guarantee Fund. Okay? If at all any need is there, you have to come and you have to infuse a capital and it is only one way traffic. So once you infuse capital into that fund, you will not be able to take it back, okay? So that is one reason why the exchange at all is stemmed to put any capital into the Settlement Guarantee Fund. And we all have made a representation to the SEBI also for considering a 2-way movement. That is whenever there is a need is there, we can ready to go and come and put the money to the settlement guarantee. And if not require, you can take it out. But still, that is not it's happened. And given the current regulation, if you are not increasing the margins, automatically your [ trust ] numbers we go back and you are supposed to bring in the capital and you need to put the capital into the SGF. So one way what we are managing the thesis, we are increasing the margin, particularly in the case of crude oil and gold, wherever the open interest is, wherever you have a good open interest system, because your stress test number depends on the -- not the volume, but the open interest. So there, like you can see the margin. Currently crude oil is more than 30 percentage there. And when you go near to the expiry 30% margin -- more than 30% margin in crude oil and even natural gas it is more than 30%. And when you go near to the expiry, there is something called pre-expiry margin that also will be introduced, which is on an incremental basis it will be introduced. Like first day 5%, second day 10%, 15%, that means by the fifth day it will be another 25% in addition to your 30-plus percent whatever is there. That means your margins will go anywhere between 55% roughly. So which is substantially brings down your leverage -- whatever the market otherwise would be enjoying that one, okay? So this is one thing really impacting the futures turnover. And some people, because in order to avoid that kind of increase in increased margins and other things, they are preferring to go for options on the buy-side, particulate the retail. But although another people, they are comfortable in writing the options and equally participating in the futures. Because for an algo to write an option also you're required to balance this position in some other asset plans. And interestingly, all our products are optional futures. So ultimately even devolvement happens at the time of the expiry if anyone in the money option holder exercise this option, you will end up getting in a futures contract, okay? It's not a cap [ CTE ] contract. So that there is a high amount of interlinkages there between options and futures. So we see that if more and more growth happens now...

Even the option is there instead of future exposure...

Gains -- that's what I'm telling. The numbers will speak itself more than anything. I'll just give you the numbers. You can see that how the numbers translate in CTE. Year-to-date, we have done something around INR 24,000 crores -- say, INR 24,500 crores in futures, compared to INR 26,500 crores in options. So in a way it like if you see the turnover, turnover in options is now more dominating compared to the futures. Same thing if you take the corresponding period, the numbers are like INR 27,000 crores in futures and INR 4,600 crores in options. So from INR 4,600 crores that has gone up to INR 26,000 crores. And futures, it is a marginal around -- you can say that around INR 1,500 crores drop in the turnover. But what we see is once options grow much higher, automatically it is going to complement the futures contract, because option writer, they definitely have to take a position in the futures. But definitely, fall will not be significant. In fact, that also should just start seeing this growth, that is the way -- that is how we are looking at it.

And what percentage of turnover is retail versus corporate for hedgers?

So currently, hedges -- while we don't give that kind of -- particularly, we don't view that kind of statistic. But some numbers can give you some light on it, which we are also giving in our investor presentation. Algos happened to be around 50%. Algos, okay. And client trading is about 51%.

Okay.

Client trading.

Wait, Algos is 50 or 1-5, point?

50.

5-0.

More than. So don't -- plus than it is not going to reach 100. Independently, you have to look at it. So what I'm saying is that clients can also be using the algo. So algo percentage also may include the client trading also into that. So independently, if you look at the holistic picture for the exchange level, crop and client this is one or 2 segregations we make it. So out of that one client happen to be around 50% and so the rest of the business is coming from a crop trading. So that is our crop versus client. Similarly, algo and non-algo, again, it can be an equal balance between 50 to 50, okay? Now coming to your question on hedges. We started this exercise something called similar to commercial cost report what you see in global market. But this is purely on a voluntary basis, what a client's assumes to be whether he -- considered himself as commercial or a noncommercial. Depending upon that one, we collect that data and repopulate it. But it's not linked to the volume, but it is linked to put open because hedges are not interested in volumes. There -- if you look at as a percentage to the volumes, definitely, their percentage will not be significant. Their contribution will be more into open interest. So open interest what we could able to see is anywhere between 20% to 35% will be the average hedges interest in the overall open interest, but again, depending upon to the commodity to commodity, that varies a lot.

To understand in terms of profit -- a very clear what you explained in last 2-3 years of how the volumes have played out. So if you look at maybe longer period, what is the total size of sort of what the exchange rate Indian corporates and retail do, maybe they do in LME sector? What is the sort of opportunity that we have not tapped into yet, what are we sort of -- sort of tie that opportunity?

See, one way you -- the way you can look at it is multiplier is what has been globally being used. But again, the multiplier still be depending upon market to market, like physical market to the futures market. There is one comparison, you can look at it. In India, the access to -- the access for corporates to access the global market is very limited. Not everybody will go and trade in overseas market. Especially, we have many MSMEs are there. You would definitely find the global markets really be little. If you take the trading lot of LME, it is about 25 metric tons, whether you take aluminum or coper or any other thing compared to you have a 5-metric-ton contract in the Indian market. And there are other costs also for them to go and trade in there. But, MSMEs, the liquidities are created in Indian market. That is where they are happy to do that well. And maybe there are one or 2 large corporates basically that who have settled there also in the global market, they do like and big corporates. But when it comes to the bullion, RBI has come out with the regulation saying that the Indian corporates cannot go and hedge in overseas market. So because of that one, all the bullion interest today it is -- you'll completely find them in the domestication. That is because we being the market leader we find out each and every one almost in this market. So that way it is there. But in other markets, there is no mandatory kind of provision that is being imposed by the RBI. It's more of a voluntary disclosures are there, that is being regulated by the SEBI. Wherein as being a listed company, they are supposed to make certain disclosure saying that what kind of risk -- commodities risk I have. And how are my managing my commodities prior to this. So these kind of disclosures, they have to make in their annual report as part of algo via regulation in other matters, but it's not necessary that they are also trade only in Indian markets.

So when did that happen, like we later on moved to [indiscernible] it is 3, 4 years. Do you expect it to reach new products also?

No. We don't see it, because gold has been taken in a different point of view because they link -- sometimes they feel that your current affair -- they will return. The only thing you fully input the gold imports into the country. But not -- it is not the case in case of other metals, so we don't see that kind of angle come up.

So this hedge your outside, how would it change the current account?

I'm saying they don't want anyone to go and take the money, park it out and use it for some other thing. As an individual, anyway, I will not be able to go on trade in derivatives globally. But the corporates can go on and do it. But gold being heavily getting imported into the country, they wanted to keep certain restrictions into the -- on this bullion trade.

When companies make cables they use a lot of copper, if not metal -- every sort of corporate would need to hedge something or the other. At least they have oil -- some bottler have some other royalty-- I mean everyone has some royalties. [indiscernible] are these guys hedging it outside? Is this all happening on LME and we don't have that gold? What is the reason why there are a fraction of what we should do?

See, the trading costs are very, very high compared to the global market. Okay. For example…

Between margin requirements.

Yes.

For model…

It is -- no, no, it is -- again, it is -- we are going on a conservative mode -- very conservative mode. So trading cost, we have some government taxes, like you have a commodity transaction tax, which is equivalent to INR 10 per lakh. So roughly, I think it is 0.01, I think 1% or something, which is very tight, which is on the sell side. And apart from that one you have stamp duty. Then we have GST, okay? So what we charge is very less. We charge something around 0.002%, so that rate is comparative lesser. So the regulatory cost is very high. And those kind of -- there is the lower transaction tax is not lived anywhere in the world except in [ Taiwan ]. There also is very small portion is -- like the percentage is very insignificant. So that way it is like trading costs are very high in Indian market.

Effectively for a corporate there might be option to either trade your -- [indiscernible] it make sense to do those.

See, corporate will look at only 2 aspects. For him the trading cost is not a big challenge, because he is not very concerned -- he's not a day trader who is going to trade day in and out. Okay? Once he takes a position, he will hold on the position for a longer period of time. Second, liquidity. If the only problem that a hedger can face is, if suppose I'm not -- I want to take a big bulk. I want to hedge myself in a very big way, then I'm going to find the market very liquid enough so that you may have to go over this and pay. But especially when you look at the MSME kind of players or there is normally a small player, they don't see that kind of liquidity challenges on the domestic exchange, because they find a good decent amount of liquidity. The only thing that an Indian exchange may not be able to provide this a very long-dated contract compared to the LME, which can able to offer you some 10 years further contracts. Because here, the contracts may be there, but it may not be liquid to that extent --it is not. But SMEs and the medium kind of players, they won't mind taking a position and going over their positions rather than going in the overseas market playing with the dollar and all those things. So that one give them many comforts. Big players who are already an importer or exporting the material and other things, they may -- Sterlite kind of people, or big companies, they may look for trading in the international market, but not in normal type of value chain.

It will be a particularly problem, right? You want the fourth quarter not coming because there is no liquidity and…

That's issue. But liquidity -- but liquidity can only matter only for a bigger one. Suppose I want to pick up only directly at 25 metric ton contract, where your order book -- suppose if it not deep enough automatically there will be an higher impact cost will be there. But if you come to the Indian market, the trading lot is only 5 metric tons. Suppose I wanted to pick up a 25 metric ton. I need to pick up 5 contracts. So when I want to go and pick up the 5 contracts, it will impact, because my net impact or net cost of acquiring could be higher than your -- what you could see in the top line. So that way is like slightly costlier here, but for the -- like I said, other value participants medium to small, they won't find it a big -- what do you say, this is not a discouragement, they feel comfortable in trading in…

Before your contracts are [indiscernible] or SME?

Yes, all are.

You see that like a -- rather for companies who want to hedge this cost, for example, importing raw materials and paying dollar to their supplier and they would want to hedge it in dollar?

See, now a days they -- anyway they have the currency forward market is very active and also currency deliveries are also active. If somebody wanted to do it, they can do it. I don't see that one affect. Only challenge, a bigger companies who have a huge production is like a long-dated contracts are not liquid enough, and you won't find, what do you say, depth -- market depth what they are looking.

And it's quite easily your [ drawing ] exchange into the markets just like you actually going to hedge directly your commodity as part of being [indiscernible]. Not an issue for you?

That is not an issue. But many of them for many years, we have been trading in the global market -- some of the bigger players. So they have their offices located there in the international market. They can easily access. But smaller players will not be able to do that. And, of course, there are not too many that kind of big players are there in the Indian market. It is only a few factories. It is oligopoly kind of market is prevalent in the Indian market, so you don't see too many players…

Especially the regulation where that we allowed mutual funds to [indiscernible] index your monetary index. This haven't been a cash register. Why are these commodity funds not getting [ loans ]?

See, currently 4 to 5 initial funds are actually in the market derivatives market. And still there are certain regulatory hurdles out there, like I'll give some examples. In the case of gold, the mutual funds are able to hold the physical material for a period of 180 days. But in metals, they cannot hold for more than 30 days. Like, suppose, I have taken a position in the derivative market and I may end up getting the delivery of the market.

Rollover, right?

I have to rollover. But if I find that the subsequent contract may not be under attractive price right now. If that is the case, my limitation is within 30 days, I'm supposed to dispose of the material that I have received. If anybody really wanted to do, it maybe prefer to score up whether than taking a delivery. So cash and carry kind of arbitrary may not be possible in this market. But that…

You can't square out, right?

You can square out. Very much you can square out, but I'm saying there is -- because these are all compulsory delivery contracts. So the trade always hands around that you may end up getting the delivery, et cetera. But if you get the delivery, you cannot hold it for more than 30 days. And the duration of -- minimum duration of the contract is 1 month. So immediately you have to roll over. So you will not be able to get an opportunity to hold on for a longer period of time and then do a cash and carry, which can give him a better profit -- profitability, okay? Similarly, there are some other restrictions are there, like in one commodity, they cannot have more than 10%. So there are certain regulations are there, which is not making really attractive to these markets. But if the co-players, they're acting, they are -- that they -- what they have recent development they have done is. The AMFI is planning to come out with a separate committee -- internal committee for commodities, because today they don't have any specific group each discusses on various aspects of the commodity derivative market. So now AMFI wanted to come with that committee. AMFI is basically an association of mutual fund, okay? They want to set up that. And specifically they wanted to deliberate on the issues, which are -- which can be acting as a bottleneck for the mutual funds to actively [ discourage ]… And there are other things, because this is a cyclical nature and because somebody will have to take buy and sell depending upon the situation. But here, mutual funds are allowed only to take [indiscernible] they cannot sell without holding this, okay? So there are certain restrictions there. So if I can say that the market is being opened up, but what -- the regulator wanted it to go in a very progressive manner rather than going in a big bang kind of measure.

So you only need one big like more of like if the mutual fund is called whatever the investors are, that would be [indiscernible].

Yes, that is anyway. But they want in a gradual manner to happen rather than anything to happen illegal. We don't want -- because mutual funds are basically the retail money is going to come into that one. So they are very particular about that fund coming into this one. So they want to open up, but they want to open up in a very progressive way. Even today, they allowed -- very recent development, they allowed foreign portfolio investors. They allowed in commodity derivatives. But they've allowed them only in the capital product to begin with. So that way it is like, okay, now the 2 capital products that are available in the market is only the crude oil and natural gas, rest of them are all compulsory delivery contracts in there. And compulsory delivery contract, we have certain GST-related issues are there. Because you -- one have to have a registration in each state, because multiple deliveries themselves are there. So those challenges will come into the picture, but I think.

And you make deliver mandatory to keep the real market and the digital market aligned? Is that why you're doing this --?

They wanted the markets to be very close to -- integrate with the physical market. See, generally profit hedging happen even if you are linking your contracts with, say, London Metal Exchange or some other contracts. Earlier this was -- in 2019 prior to the 2019, all of our contracts are linked to London Metal Exchange -- metal contracts, basically. They are linked into the London Metal Exchange. But subsequently, because of the SEBI regulation, we have to convert them into the physically delivered contract. So gradually, we have converted from cash compulsorily delivery contracts. But this compulsory delivery contract, the main problem is the GST, because when you have multiple delivery centers, GST review station have to be there in multiple places to handle that particular market.

Are these things on an ongoing basis being addressed, because…

GST may take a longer period of time, while we have been -- we made several representations to the government. But here, GST will be taken up both at the state as well as the Central government. There are certain aspect how the sharing of GST will happen is anybody's pick. So there is certain involvement of -- state governments are also there in this GST related. So when states are involved, it's time really because, suppose if Central government take some basis on it and what is the impact to [indiscernible] that what is related.

And in terms of new metals, are we covered in most parts rather any -- in sort of metals, [indiscernible]?

So while we are trading, we have applied for aluminum alloys, there is steel TMT.

You apply -- SEBI [indiscernible]?

We're also looking for [indiscernible] again it is the pipe.

And there's been IEA sort of in the…

IEA, we have a tie-up with IEA. But ERC -- there are joint committee has been created for electricity delivery. ERC that is electricity regulator and they come together created their own. They are deliberating on how to roll the contract [indiscernible]. But currently, for some reason, they have to come out of a cap in the electricity market, which is a sport market -- price cap. So given this kind of challenges in the spot market immediately, they don't want to enter into derivatives. So that is keeping the things delayed. So once I think they open up and all this kind of thing is removed, we will see regulator [indiscernible].

Sir, the aluminum alloy, electricity and any other which is in the pipeline?

Currently, the focus mainly is on option because we have seen this growth in option, so we wanted to rollout more products in option. So we are planning to come out with a monthly gold option, which is bimonthly today to reduce the cost of premiums in the buyers, so that we can expect more volumes to come. Similarly all our silver contracts are bimonthly contracts. So we want to -- that also we wanted to come out with monthly. So futures will remain bimonthly, but options will be monthly contracts. So 2 contracts will be evolving into one single underlying futures contract. That is how with the contracts have been designed.

One thing you mentioned versus LME or other global exchanges versus, the margin requirements, it's been a more conservation. This is either -- example is, crude at 30% margin…

There, it will be around 10%. And here, you can see that it goes to 55%, imagine…

Transaction cost, how different it is?

See, while our transaction costs can be equal and more or a slight seen may be higher compared to the global market. All the regulatory things are in excess to what is been charged in our global market. Yes, regulatory charges. Regulatory charges like I said, it is INR 10 per INR 1 lakh on sell-side that is CTT, commodity transaction tax. Stamp duty is around INR 2 per INR 1 lakh on the buy side, then GST is around 18%. Okay. These are all regulatory cost. It is not there in…

I mean, you are pretty much a monopoly in this space. So are there any other exchanges trying to create a segment or working.

So we all know that now it is -- market is being opened up. Any equity option can come and offer the products in commodity market.

Are, sir, is there any edge that you have registered for the…

See, currently, the liquidity drives the liquidity, okay? So we -- now it is almost 3, 4 years since NSE, BSE how venture eventually into the commodity derivatives market. But our market share is far higher, 96% or something is there. So we don't see them as threat. And they are continuing with their liquidity market and have some scheme. And that NSE continue to weigh the transaction fee that we are levying and recently -- we have started leaving our options. Prior to that one, we were not charging. But from October 2021, we started levying charges for even option. So we are independently taking. We are not concerned about any competitive process.

And sir, brokers to registered with the exchange, how easy or difficult it is? Is that a hurdle?

It is very easy now. It's not complicated that way. But broker anyway, you can register through an exchange. But finally, it is -- registration also will happen under schedule level. So once a member is registered with the SEBI, easily he can become the member of any other exchange. Because it is like common database. Is that one can really can pick that.

And so from BSE…

So that is not an issue. The only thing is the compliances have become very herculean. The back rate is like thing. So the number of trading members always -- there is consolidation is happening because of that kind of -- because managing these kind of compliances is a challenge for a small broker.

How do you ensure like compliance of the trading member, like every -- it we will be royalties, contract, hedges and there isn't enough money numbering.

Actually it's not allowed in the Indian market. Totally cash is not allowed. Yes, the situation is for tighter as compared to the global market here. So nothing because the regulations are very tight.

If you move to the cost structure side of it, right, I believe you have your IT systems currently on a variable, you outsource, you are paying someone [indiscernible] and you want to eventually move to your own platform where your variable cost becomes a fixed cost. Can you just talk about that transition this year. You are seeing impacts of that when you're having more transition on the volume and the cost save improvement.

Cost saving like, we already have told in our earlier meeting also. With the TCS, the arrangement is more -- we have our AMC which will begin after a year of operating because initially, there will be some warranty period will be there. After that one the AMC will kick in. But it is not the linked put to the wall, it is more like a fixed, okay. Compared to what we had with 63 Moons, where you have a variable as well as a fixed, okay? So that we can able to like -- if you can be able to migrate which our intent is to go more on to a new platform before end of December, that is our planning. So we will be avoiding all this kind of variable component. So that will a big advantage to us if our volumes increase. Because otherwise, you have to factor in other aspects also, because not only the platform, you also have to buy licenses for various other associated software like White Hat and all those -- White Hat -- sorry Red Hat. So given that kind of thing, there will be such an amount of additional costs will be there towards that plan. And also your other infrastructure costs, these all -- there will be like -- you will be having -- first 5, 6 years, you will be having that amortization and all those things will be there, even after you migrating to the new platform. So we see that a big difference can only arrive if your volumes goes up.

You have around -- currently your software and fixed charge is about INR 95 crores a quarter. Does that sound right? Yes, INR 95 crores a year software charges?

Software is not that much. It should be around INR 50 crores to INR 60 crores, it should be.

That's a variable part, I think?

No, no, both fixed and variable.

INR 50 crores to INR 60 crores. And if this moves to this new contract, how much -- in the current volume, how it will save going forward?

So that number, sir, we are not disclosing to the market so far, that's in the commercial term. But it will be a big favor. That way it is like -- it will be in the single-digit number.

Even at current volume, you would still be better off paying the fixed than the --?

I mean the current volumes, even though we may save on these costs, but you have other costs around that, like amortization and you have, like I said, you have to buy other software related associated costs there. So, look, in total, it will not be a big savor for you, but -- on the current volume. But if you're able to graduate yourself to a next level and other thing, you can able to better that custom the cost. You will be able to clear. But after -- in the longer run, if you don't have any variable, I think it may then result of that.

I mean this is a big transition. I mean in an exchange the IT platform is pretty important, right? I mean, are you sort of anticipating some feeding issues? I mean we don't want it, but is it natural to have some feeding issues there, [indiscernible] not functioning well or things like that. So how do you expect the transaction to take operational?

So, well, like I said earlier, it is like our objective is to go live with the new platform by end of December. That is now mocks have already been started. We've been doing mocks, okay. So once parallel runs also will be running and after that one we'll be going live.

Does your business required any form of fixed assets [indiscernible]. This is totally working capital negative more or less. Is there any investor capital in this business?

See, if like if you want to come out with the new entrants, like today we have to invest in India International Bullion Exchange and [indiscernible] that is one. Now all the exchanges and the clearing operations -- not clearing got positive. They have come together and they have setup that entity. So that is in GIFT City. So that kind of requirement may arise. So similarly, we are also looking at coming out with the smart exchange for coal. Of course, the regulations are not there, but there could be a requirement that may come up. And the colocation is not allowed in the Indian market -- Indian commodities. In equity it is allowed.

What is coal…

Colocation.

No, no. But you said something before that?

Coal, coal.

What about it? What is the point there and is this --?

So coal is -- currently the regulatory ministry has to come out with the regulation, otherwise, we'll have joined hands with coal junction, metal junction as an entity, so that they are also active in coal auctioning and other activities. So if regulator -- and I think they are planning to come out with some set of regulation for developing this coal spot market in India similar to alert kind of thing. Okay. So once -- if it is there, we are also very keen to enter into that particular market. And EGR is -- it is going to be more of a segment, Electronic Gold Receipt. That has been alone now. SEBI has come out with the regulation. So if that opens up, I think once -- after this migration, I think definitely, we will look at that particular product also. And then maybe -- but platform how to be different, not as the same platform cannot be used.

I have one last question, I think leave it them if they have any questions. But when we look at it from a distance, I mean, you're not this close to understanding the data regulation, et cetera. If you were to say that if these one or 2 things happen, regulatory, then our business is it's a tremendous tailwind. So what do those one, 2 big changes that you think would be possible down --?

So, one, I think if we can get some decussation with regard to the SGF, Settlement Guarantee Fund, like I said, if it is made 2 ways then I think definitely we can able to bring down the margins down in our crude oil contract as well in gold. I think that can -- really can pick up our future volume. GST has been a matter of [ transition ], but I think we are not expecting anything to come immediately, but if it happens, I think, that is -- again that definitely help in developing the market and it can make the market a family environment. Okay? That is second regulatory thing. Third is I think, maybe I think, even once these FPS are allowed to participate after some commodities [indiscernible].

So the whole idea of this compulsory delivery, that is not a big target and this is point also having easier to…

Yes. But regulator has taken a stand on it, but what is more concerning is this -- they are not allowing us to come out with multiple areas. Earlier, we used to have a main contract and then [indiscernible], so both used to complement each other and both are doing good. But now the rules says that you can have whatever may be the spike, we need to have only one contract. You cannot have multiple contract other than in bullion segment. So that is what is compelling us to have only one contract. And also, it made the contract size very big. Earlier, we were -- if you take the case of nickel, we were having something around 250 kg contract and 100 kg contract, which have been increased to 1.5 metric tons contract. So there has been a substantial jumps have been taken place in terms of trading unit, trading rate because of that regulation. But anyway, we've been making a representation to our regulator allowing -- they can allow us some more in multiple areas, we definitely will take the opportunity [indiscernible]. So there has been demand for some metals of course.

[indiscernible] last question for your investment income, how much of your revenues are investment revenue and just as a…

Investment income currently, you know that we have strictly governed by some regulations like a short-term duration fund we'll put it. And also, we are now investing in some state government bonds that is what we are doing currently, which is slightly a higher interest. So that way, we are very conservative, we will not be looking.

So this is on our own accrual, or is this some sort of margin [indiscernible]?

We are selling any brokers…

Is this some form float that you have from clients margin at metal? Or is this not profit getting reinvested into. What is the float -- the asset side and of course in the side?

There will be multiple -- it is like because our -- it is our own funds itself is there.

Your own cash balance.

Cash balance is there. Apart from that one, I think the broker funds. But whatever money they are putting in cash because the margins can be made in multiple ways, it not only in cash. You have to deposit, you have other ways to do that. So that component -- cash component is very smaller quantity.

So you can make a yield on broker deposits?

Yes. But I don't have the figure, but therefore here we can give you a better [indiscernible].

It is very helpful. Thank you so much.