The Securities and Exchange Board of India (Sebi) had last year allowed banks to enter commodity futures trading for its retail customers. This was followed by the RBI also opening the sector for banks in a bid to deepen commodity futures with a new class of traders.
Soon after, private banks started engaging with national-level commodity exchanges to understand futures trading in non–agri and agri commodities. Apart from ASL, ICICI Securities and HDFC Securities have also applied for membership of both MCX and NCDEX.
While efforts to reach Shipla Kumar, chief executive officer of ICICI Securities, did not elicit any response, a senior HDFC Securities official confirmed having applied for exchange membership.
When asked about the one-year delay after regulators approved banks' entry into commodity futures, Thukral said, "We needed to understand commodity futures trading, set up facilities, appoint required personnel, etc, to start the business."
ASL has offered its clients trading on the MCX free of broking charge for a week, after which the broking firm would levy a nominal broking charge on its clients.
"Banks-led broking firms currently contribute to between 30 and 40 per cent of equity customer base. With bank brokers allowed to trade in commodities, similar contribution may be seen in commodity markets
going forward. In the next 2-3 years, they are expected to increase the commodity market volumes by at least 15-20 per cent," said Mrugank Paranjape, managing director and chief executive officer, MCX.
ASL has around 2 million customers, while the MCX has issued around 2.6 million UCC (Unique Client Codes) and is poised for higher growth with bank-led brokers' entry into commodity futures.
Meanwhile, MCX has reported a decline of around 15 per cent in its daily average turnover this financial year at nearly Rs 220 billion in August compared to Rs 260 billion in April this year.