MCX, otherwise known as the Multi-Commodity Exchange of India was approved by India’s regulatory body in late 2003. The exchange deals in energy-related products, agricultural products and precious metals. Since its approval by the Securities and Exchange Board of India, the exchange has realized the majority of its trading value from only two precious metals. The exchange’s dependence on silver and gold has risen from around 50 percent in 2007 to near 65 percent by 2011.
The success of MCX has been shown by its domination of India’s silver and gold markets at shares of 98.5 and 97.1 percent, respectively. Its overall market share has risen to 86 percent in 2011/2012. MCX has become the largest global silver and gold trading exchange.
Unfortunately, the very market that spurred the success of MCX could create issues for the sky-rocketing exchange in the coming years. A surge in international open interest, hedging, excessive volatility and rapidly changing customs and taxation requirements could challenge the steady revenue and sustained volumes that MCX has, thus far enjoyed.