MARKET DEVELOPMENT
NCDEX Hikes Transaction Costs on Agri-commodities
NCDEX Hikes Transaction Costs on Agri-commodities
04/06/2014 (Hindu Business Line) - Leading agri-commodity bourse NCDEX has hiked the transaction charges on agri-commodities effective this month, a move which experts say is aimed at improving the financial viability of the exchange that has taken a beating due to falling trade volumes.
In February, the exchange had slashed the transaction costs to encourage trade volumes. Charges for agricultural commodities were kept at Rs 1.95 per Rs 1 lakh turnover for the first Rs 200-crore daily volumes, and and Rs 1.3 per Rs 1 lakh for incremental average daily volumes above Rs 200 crore.
In a latest circular, NCDEX said that it has revised upward the transaction costs for 15-odd agri-commodities to Rs 3 per Rs 1 lakh for average daily volumes of up to Rs 100 crore. For additional volume, the charges are kept at Rs 2 per Rs 1 lakh.
However, NCDEX has kept the transaction costs unchanged for about 10 commodities such as gold, silver and palm oil at 40 paise per Rs 1 lakh turnover for a volume of up to Rs 50 crore and 30 paise for volumes exceeding Rs 50 crore.
The new transaction charges are effective June 1.
Analysts said that normally exchanges do not hike the transaction charges when the volumes are dropping significantly. Their aim would be to keep the charges lower to boost trade.
NCDEX is believed to have taken this decision to improve the sustainability and financial viability of the bourse as falling volumes in recent months have affected its earnings, they added.
Trade volumes are falling at NCDEX and other exchanges as well due to the imposition of commodity transaction tax (CTT) and dent in investors’ confidence after the Rs 5,600-crore payment scam surfaced at the spot exchange NSEL.
As per the data maintained by the Forward Markets Commission (FMC), trading volumes on NCDEX fell 33 per cent to Rs 79,415 crore in April this year from Rs 1,17,840 crore in the corresponding month last year.
In February, the exchange had slashed the transaction costs to encourage trade volumes. Charges for agricultural commodities were kept at Rs 1.95 per Rs 1 lakh turnover for the first Rs 200-crore daily volumes, and and Rs 1.3 per Rs 1 lakh for incremental average daily volumes above Rs 200 crore.
In a latest circular, NCDEX said that it has revised upward the transaction costs for 15-odd agri-commodities to Rs 3 per Rs 1 lakh for average daily volumes of up to Rs 100 crore. For additional volume, the charges are kept at Rs 2 per Rs 1 lakh.
However, NCDEX has kept the transaction costs unchanged for about 10 commodities such as gold, silver and palm oil at 40 paise per Rs 1 lakh turnover for a volume of up to Rs 50 crore and 30 paise for volumes exceeding Rs 50 crore.
The new transaction charges are effective June 1.
Analysts said that normally exchanges do not hike the transaction charges when the volumes are dropping significantly. Their aim would be to keep the charges lower to boost trade.
NCDEX is believed to have taken this decision to improve the sustainability and financial viability of the bourse as falling volumes in recent months have affected its earnings, they added.
Trade volumes are falling at NCDEX and other exchanges as well due to the imposition of commodity transaction tax (CTT) and dent in investors’ confidence after the Rs 5,600-crore payment scam surfaced at the spot exchange NSEL.
As per the data maintained by the Forward Markets Commission (FMC), trading volumes on NCDEX fell 33 per cent to Rs 79,415 crore in April this year from Rs 1,17,840 crore in the corresponding month last year.