Monopoly stock falls 3% after SEBI raises concerns over weekly expiry contracts

Synopsis:
MCX​‍​‌‍​‍‌​‍​‌‍​‍‌ shares dropped on the news that SEBI might not permit weekly expiries; thus, a volume growth that is going to be missed is creating concerns. 

The shares of this leading commodity exchange, which has a staggering market share of nearly 99 percent in the commodity futures market, are in focus after a key report from SEBI. In this article, we will dive deep into the details of it.

With a market capitalisation of Rs 51,287 crore, the shares of Multi Commodity Exchange of India Ltd reached a day’s low of Rs 9,988 per share, down 3 percent from its day’s high price of Rs 10,307 per share. Over the past five years, the stock has delivered a robust return of 540 percent, outperforming NIFTY 50’s return of 96 percent.

The reason behind the fall

According​‍​‌‍​‍‌​‍​‌‍​‍‌ to sources, SEBI is not in favour of weekly expiry contracts on MCX. They believe that these short-term derivatives may expose retail traders to higher risks, especially in the case of volatile commodities such as gold, silver and crude oil. Weekly contracts easily become the target of speculators, and SEBI fears that small investors who do not fully understand the risks may thus incur heavier losses.

In order to decide on the matter, SEBI has requested the commodity exchanges and brokers to produce the client trading data of the last four years. This decision reflects that there will be a detailed review of the proposal and that any approval will take time. At present, the decision implies that there will be no clearing of weekly expiries on MCX in the near future and that the current monthly settlement system will ​‍​‌‍​‍‌​‍​‌‍​‍‌continue.

How This Could Impact MCX’s Business

MCX’s​‍​‌‍​‍‌​‍​‌‍​‍‌ trading volumes could have been significantly increased by weekly expiries, like the one that occurred in NSE equity derivatives. In case SEBI decides against allowing weekly expiries, MCX will not be able to benefit from the additional activity, higher participation, and increased transaction revenue that such contracts usually generate. 

However, MCX is still on a strong growth path in terms of operating revenue and EBITDA by introducing new products such as Nickel and cardamom futures, and spending on technology and compliance. 

Financial and Other Highlights

MCX reported a core revenue of Rs 374 crore in Q2 FY26, a decline of 31 percent as compared to Rs 286 crore in Q2 FY25. Additionally, it grew slightly by 0.27 percent from Rs 373 crore in Q1 FY26. 

Regarding profitability, it reported a net profit of Rs 197 crore in Q2 FY26, a 28 percent growth from Rs 154 crore in Q2 FY25. However, it recorded a decline of 3 percent from Rs 203 crore in Q1 FY26.

The Multi-Commodity Exchange of India Limited (MCX) stands out as a premier commodity derivatives exchange in India, facilitating online trading in a variety of commodities such as bullion, metals, energy, and agricultural products. Additionally, MCX has formed strategic partnerships with global exchanges like CME, LME, Dalian, EEX, and more, fostering knowledge sharing and promoting global integration.

MCX​‍​‌‍​‍‌​‍​‌‍​‍‌ managed to achieve a significant Average Daily Turnover growth of 87 percent YoY to Rs 4.11 lakh crore in Q2 FY26 from Rs 2.20 lakh crore in Q2 FY25. The biggest surprise was the bullion segment, which jumped by a staggering 445 percent YoY, to Rs 2.34 lakh crore in Q2 FY26 from just Rs 42,864 crore in Q2 FY25, led by the explosive growth of gold and silver derivatives. 

The food (agri) segment also saw a sharp 161 percent increase, to Rs 38 crore in Q2 FY26 from Rs 15 crore in Q2 FY25. Energy turnover went up by 1 percent only and thus remained almost unchanged, while the base metals and the index segment dropped 25 percent and 64 percent respectively. The massive increase in bullion and the steady momentum in energy were the main reasons for the strong overall YoY ​‍​‌‍​‍‌​‍​‌‍​‍‌turnaround.

Written by Satyajeet Mukherjee

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