NOT A BIG DEAL

In December, the Securities Exchange Board of India announced that India’s stock exchanges could begin commodity trading from October this year and vice versa. With this, India will become the first country with universal exchanges where equities and commodities are traded on a single platform. This, however, is not as good for investors, market intermediaries or exchanges. This is because once an exchange gains market share, be it in equities or commodities, it is difficult for a new entrant to grab a foothold. Even in the current scenario, if we examine the dynamics between NSE and BSE in equities or between MCX and NCDEX in commodities, dominant players continue to enjoy the lion’s share. The need of the hour is to widen the scope of participants and increase liquidity and depth. Hopefully, with mutual fund and portfolio management services expected to be allowed in commodity exchanges, there would be some relief on the liquidity front.