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Multi Commodity Exchange of India Ltd
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Ladies and gentlemen, good day, and welcome to the Multi Commodity Exchange of India Limited Q2 FY 2019 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as of the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded.I now hand the conference over to Mr. Mrugank Paranjape, Managing Director and Chief Executive Officer. Thank you, and over to you, sir.
Thank you, and good evening, everyone, and thanks for joining us on this call, slightly late in the evening, and welcome to our quarterly results. A quick recap on some of the developments in the last couple of months. I think as you would've seen the results that we've put out, a very good growth that we are seeing in terms of our overall volumes. The turnovers is sustaining; we have got an increase of 1.2% over the last quarter, but more importantly, I think, again, in September and October, volumes have really been good, in excess of INR 27,000 crores per day in terms of ADT over the last 40, 45 days.The other big event in the last quarter was that the first of the banking subsidiaries went live with their booking activities and Axis Securities is now a member, which has commenced operations on MCX. We have firm dates from SBICAP, SBFC Securities, Yes Securities and IDFC Securities now, and we expect them to be trading on the exchange within the next 3 months. So I think in terms of that big development, which we had also, the last several months said would be a positive for the exchange, we think it's coming to fruition, with the large bank distributors becoming members and actually, going live on the exchange.In terms of the regulatory side, we've seen a couple of good moves in the last quarter as well. I think the most encouraging for us was the fact that SEBI has cleared the proposal for allowing participation by what they are calling EFEs, Eligible Foreign Entities. This will now enable entities based outside India to work through authorized stockbrokers and take hedge positions in commodities where they have exposure in India. Again, while this is not something which may immediately translate into large volumes, it definitely will add in a big way to the open interest that gets built on the exchange.On that front, another development in the last quarter, which was really, a result of a regulatory intervention, the fact that the Reserve Bank of India did not allow international hedging of gold from the 1st of July, has resulted in a lot of people hedging on the domestic exchanges and that MCX, the open interest which used to be in the range of about 7.5, 8 tons on the gold contract, has now crossed 15 tons. And that's a very, very big development for us. We believe that as, again, regulators seem to be keen to open up the market for institutional participation, this open interest will really go a long way.And on the development that we have seen from SEBI's side, the discussion with SEBI on introducing index as a product within the commodity segment has gained traction, and we see that coming through in the next 6 months or so. The one area where I think we did not see as much development as expected was on the introduction of mutual funds and PMS providers. SEBI has constituted a smaller subgroup which gave its report about 1.5 months back. We believe that report will pave the way for the introduction of institutional participation, but that's something which still remains as a to-do for all of us in the market.With that, I think in terms of overall development, those are the key events. From our perspective, we entered and launched what was the first clearing corporation in India and in commodities. This went live over the last month end. So we had the inauguration on the 30th of August, and we went live on the 3rd of October, so it's been -- 3rd of September, sorry, and it's been live now for more than -- almost 45 days, with 1 month of live operations in the last quarter as such.So with that, we have fully complied with all what SEBI had said when SEBI took over this market in 2015. And as the first clearing corporation which went live, we were very happy to have done so. Those are some of the key updates that we had from the developments over the last quarter. I think you will have all seen the results, and we will be very happy to take questions which will help you understand more in terms of both the financial performance but as well as that of the overall performance of the organization.So we'll take a pause for questions to come in, and I'd like the moderator to just guide you on how the questions should be directed.
[Operator Instructions] The first question is from the line of [ Aprit Verdawan ] from [ Systematic VMS ].
As you've seen traction in ADT, kindly give a sense on how has been the growth on number of contracts traded in basic commodities?
Yes. I think if I heard your question correct, you're saying how have the volumes sort of grown in terms of ADT? So I think if you look at the volume numbers, the volume numbers have actually grown across all our commodities. If I look at the average daily volume, and I'm looking at this not just in terms of contracts, but if you normalize by looking at the volume of the commodity traded, because we have different, say, contracts. In gold, we have a 1 kg; we have 100 grams. So if we just accumulate all of that. Across the board, I will say, whether it is silver, whether it is natural gas, whether it is the copper, lead, I think in most of the commodities, the volumes have taken a fairly good increase. There are some commodities where it could be a decrease, which is a natural thing. So in cotton, the volume has gone down overall, because this is the lean season for cotton. In crude, while the volatility and the price have been up, the volumes are marginally down, maybe about 4% or 5%. So again, overall, across the board, volumes have been good and a good increase that we have seen, but there will be 1 or 2 commodities where there has been a slight decrease.
On the crude side, normally, when the prices are moving up and volatility is higher, the volumes tend to move up. Is there any special reason why the volumes have not been able to catch up?
So I think it's also not just a function of pure volatility. And again, even if we take volatility, Q1 volatility in crude was about 1.75%, volume is actually slightly down at maybe 1.65%, 10 basis points lower than the previous quarter in terms of volatility. But again, because the amount of trading is also, in some ways, related to the contract size, and increase in price does sometimes have an effect with the volume being slightly lower. So I think that's where crude may have seen some change. But yes, volatility also has been slightly lower than the previous quarter.
The next question is from the line of Anil Desai from [ Total Capital ].
This is Anil with CME. I have 3 questions. First is the, well, the ADT has gone up by around 12.5% but the amount of revenue has increased by maybe around 6.5%, so I think you are seeing some kind of decrease in our yield. So can you elaborate on the reason for that and give the sort of the pricing part, the product mix part which is related to this decrease?
Yes, so I think, Anil, in terms of explaining the revenue from operations change, just comparing to the last quarter, the ADT is up by 1.22%, but there are 3 things which would have impacted this for it to be slightly lower than that number. So while we were positive 1.22% on ADT, the realization is very, very marginally down. It's down by 0.28% only. But again, in terms of overall revenues, the number of trading days has gone down by 1.5% as compared to the last quarter. And there is also a liquidity enhancement scheme, as you know, which we have been running in our gold options contract, where, while it's not a payout that we give to the market, we give it as a rebate in the futures prices. And there, the impact, which we have taken in the last quarter, was only 72 lakhs, because the scheme had started midway in the quarter. But for this full quarter, the impact is INR 1.67 crores. So I think these 3 things put together, while we had a positive ADT movement, have resulted in a minor decrease in the revenue from operations.
Okay, that's very, very clear. Second is related to what you just mentioned [ probably you ] started LES earlier than, I think, eventually you have a common benchmark beyond which you want the option volume to go, it's codified in the plan. So have you used that benchmark where you would start giving the clients other options trading or are we still far away from that?
So I think the question on whether we are at a stage where we have decided to charge, definitely no, not this quarter. I think we're not charging clients this quarter on the options, for sure. But in terms of where we did, I think in terms of percentage to futures, that is what we are looking at, I think that some of the contracts, we are doing quite well. And I will take crude oil specifically, in terms of the overall percentage of daily clients that we are seeing in crude is very healthy. We are seeing a very good participation of retail clients and therefore, some of these contracts, we would expect good traction over the next couple of months. But overall, yes, it's been slightly slower than what we had expected and the impact of LES has not come through yet in terms of the volumes, even in gold. So the volume in gold future options has been good, but the participation hasn't climbed in that same proportion that we would expect.
Okay. So at least for this financial year, we don't see any room to start charging for options, for the year?
Not for this financial year, no.
Okay, okay. And my last question is, I think, if you can give any update on the custodian side, where why, during round 1, [ you said all things ] capital, the AIFs can start participating in the market? Any updates and any time line around that? That would be useful.
Sure. So I think that the update is that SEBI has constituted a subgroup consisting of custodians, exchanges, some investors as well as the key clearing members. And I think that whole group went through the current regulations, the concerns, and came up with a sort of white paper which explains to SEBI what we wanted to achieve and how within the current guidelines, we could still achieve that for the commodity derivatives market. That paper was submitted to SEBI about, maybe 1.5 months ago. We believe that addresses the concerns that the market participants or custodians had, and yet is within the overall framework that SEBI has for this market. So from our view, it's all been answered. We are now awaiting SEBI to take a final call on these clarifications and move forward, but I think it's now at the stage where it's very difficult for any of us to give a time line.
The next question is from the line of Ashish Chopra from Motilal Oswal Securities.
Firstly, just as a follow-up to the previous question, if you could elaborate on what other kind of threshold you would be looking at for options percentages before you feel comfortable to start charging for the same?
So I think, Ashish, it's a bit difficult to give a percentage number there, but I would think that definitely for the next financial year, we would want to charge, because we would've given enough time for the market to have absorbed these products. We would have run them for more than a year in gold and close to a year when it comes to all the other products. So I would think that definitely, we will want to charge starting in the new financial year. In terms of percentage, we would want to be closer to double-digit percentage when it comes to options to futures ratio for us to start charging. So I think those are 2 things that we're looking at. But from a time line, I think the time line might dominate in terms of when we start charging.
Okay. And once that happens, can the Liquidity Enhancement Scheme also continue to be present in parallel or does that have to be shelved?
So these are not connected. We may discontinue the Liquidity Enhancement Scheme. And in fact, as we speak, we have discontinued the Liquidity Enhancement Scheme in the gold options, because the sort of risk-return that we had, and then there's no risk here, but we're talking about basically the spending that we had, wasn't the return in terms of enhanced participation was not coming through. And therefore, we are not running the Liquidity Enhancement Scheme anymore in the gold options.
Okay. So any outlook on how much could maybe spend towards this in the second half of this fiscal?
So as you know, we have -- it's not a spend, again, it's a rebate that we've given. Until now, the rebate given on the Liquidity Enhancement Scheme was approximately INR 2.4 crores. Now for the rest of the financial year, we do not expect to give any rebates on the Liquidity Enhancement Scheme, because for this quarter at least, there's nothing that has been approved, and we don't see any immediate need for putting in something in the next quarter as well.
Okay. And just the last couple of questions from my side. Firstly, just wanted to understand the software support charges line item. So running that, we do pay INR 4.5 crores plus around 10.3%, if I'm not wrong, of, for the transaction revenue. So over and above that, what would be the incremental charges that go toward, into this cost line?
So if I'm just -- you're looking at what we've put out on the BSE in terms of our expenses line, where we say software support charges and product license fees?
That's right.
Okay. So what comes in there is essentially the costs which are payable to FT for technology, which you are correct, there is a fixed cost there per annum. This is at 10.3%, as you said, which is linked to revenue. In addition to this, there is product license fees. These are license fees that we pay to exchanges such as CME, LME, et cetera, for all the product licensing we have with their contracts. So if you are looking at the reason why there's been an increase, the reason is that there is an increase in what CME is charging us as license fees and that is something which kicked in from 5th of September in this quarter. So that's the reason why the product license fee portion has gone up, whereas overall software support charges have remained very similar because our revenues have remained similar between these 2 quarters.
Right. And just lastly, you had mentioned that there's going to be competition. You may, so probably, exercise the room to revise the pricing a little bit. And we do see that in the very initial days, at least one competitor has roughly around -- been doing around 10% of the gold volumes that you have been doing. So would you think that it's a start that would merit further, maybe, thought process around acting a little bit more aggressively in the market? Or what will be your thoughts around the pricing as it stands?
So I think first, to address in terms of the volumes itself and whether we are seeing any impact of the competition coming in. So if I just take the numbers and if I look at how we were running in the last quarter versus now October, what it has been, bullion which is there, I think the competition has started. Our volumes, if I compare last quarter with what we are seeing in October, have really not taken any hit. And therefore, if volumes coming into the other exchanges are incremental volumes and it is increasing the pie, that's a great sign. Partly, the market is increasing overall in size and therefore, we don't see that as really a big threat for us to immediately react by doing anything on the pricing side.
The next question is from the line of [ Prashant Koulgi ] from Edelweiss.
This is Kunal over here. So firstly, in terms of maybe how has been the development on steady securities from distribution. So we had the one with Axis Securities and how much of the impact initially? Does it have any? And how we are on looking at it going forward?
So I think this is definitely a great event for us in terms of the fact that the bank distribution is now getting onboarded. Obviously, one, whether that is going to show up in like, 15 days or a quarter, I don't think that will happen. At the end of the day, these are very large organizations which have a very wide footprint, but to activate all of those touchpoints does take time, which is why it's taken us about 6 months to get them onboarded and start them training. At the same time, like we said, we hold the belief that over the next 2-, 3-year horizon, the banking subsidiaries together will add at least 10% to 15% to our volumes.
But in terms of maybe the traction, if you look at it Axis, and particularly maybe with respect to the other players, like HDFC, ICICI, SBICAP as well. So how is it going? Is it maybe beyond expectation or is it that we are also seeing some delay and maybe slight further postponement?
No, like I said at the beginning of the call, we have some very firm dates from all of these people, starting from as early as 5th of November and going into about January. So I think this is exactly in terms of the timing that we have expected. We have said this in the beginning as well and in our last 2, 3 calls, that the general decision period for bank subsidiaries to get really going is anywhere between 6 to 9 months. We admitted Axis Securities as a member in January. They started trading in August, so that's like a 8-month period, which is exactly within expectations. So I think this is in line with expectations. That's what we believe is the time taken for these large organizations to get activated, but the long-term impact we still believe will be what we are expecting.
Sure. And just in terms of the breakup of the overall revenues. So how much has been the transaction income and how has been the treasuries less investment income?
So if you see our numbers that we have just put out, our -- in terms of operations for this quarter, is at INR 71.1 crores, and the income from treasury is at INR 22.17 crores.
So this entire other income would be treasury?
Yes.
71, so 71 is the revenue from operations that will be entirely transaction fee?
Yes, plus I took about 5%, which is not transaction-related fee, like membership and other things that we take.
Okay, okay. And thirdly, in terms of the entire evolution of the exchanges, so now, maybe BSE has talked about commodity trading; NSE, we have seen maybe delaying a bit. But how are we seeing -- there have been a lot of talks in between MCX and NSE merger. So how are we looking at the entire space evolving? And maybe is it like maybe NSE and MCX getting together, because one is very strong in terms of equity and currency and the other is strong on the commodities? So how are we seeing the entire space evolving?
So I think I will split your question into 2 parts. One is the overall question about new exchanges entering commodity derivatives. We have consistently maintained that we believe it's a great step, it enlarges the market. And the analogy is still the same, that this is like the early '90s, when the Indian car market really grew because we had more participants. It doesn't mean that people who were there or who are there, like us, have too much of a threat, because we believe there are enough examples that when the market grows, people grow together in it. To your other question, I think we've clarified already, our clarification is on the BSE website. There's nothing further to add in terms of any questions around whether exchanges will join, merge, whatever.
The next question is from the line of Aksh Vora from Praj Financial.
I just wanted to know with the recent developments happening in the company and in the sector particularly, what kind of volume growth are we anticipating in the next 3, 4 years?
Aksh, I think, if I may say, what we are seeing over the last couple of quarters is in line with what we have said, that the generic growth in this market is something which is like 8% to 10% growth that you would expect in a year. The key factors, a lot of which are long-term factors, which will really grow this market in a big way, and those are around distribution going up because of bank subsidiaries, because of new products kicking in, like options and indices, and finally, new participants coming in, like mutual funds and for the participants those are the other factors which will add to the growth. So I think if you put all of that on a 4-year period, we believe that like a 15% [ CADR ] is a number which is achievable for an exchange like us.
That's great. Also, can you say the size of the market, particularly by various participants coming in the market and also the hedging, others coming in, in the market, can we say the market size can be 3x or 4x from here?
Difficult -- I don't know what you define as market size, but it would be difficult for me to say that it would be 3x or 4x.
But we see the market scalability to go to 3x, 4x from here or maybe having a good threshold limit, that you can say?
Can't comment on that, Aksh.
Okay, okay. And also, what's happening on the mix? We see 12% of gold. Earlier, it used to be around 40%. So is the mix likely to be in the same kind of proportion for next couple of years or...?
I think, Aksh, if you see, we were basically at a certain percentage prior to demonetization in terms of the overall volumes and what we were seeing in the market. And I think post de-mon, that number has taken a completely different, sort of, picture. So I think that tells you that the mix is likely to remain similar. If we just look at the last 3 quarters that we are talking about, it's been roughly a similar mix and I don't think that will change in the near future.
Next question is from the line of Vineet Maloo from Birla Sun Life.
I just wanted to understand, well, the difference between traded volumes and the turnover a little bit more. I'm a little bit confused, because on a Y-o-Y basis, it's still a 6 percentage points difference. Although you did elaborate on a sequential basis the numbers were quite small, but then somehow reconcile the 6 percentage on a Y-o-Y basis. Could you throw a little bit more light on this, please?
Yes, so I'll give you the way the 1.2% ADT movement on a year-on-year basis has panned out, but if I just look at the Y-o-Y basis, which is, so for Q -- the same quarter 2017 versus this time, we've moved from 6,726 -- yes, so it's INR 67.26 crores and INR 71.1 crores, and that's like a 6% increase. That 6% increase comes mainly from ADT movement, which has gone plus-12%, but it is offset by realization, which has gone down by about 1.38%, and the LES impact, which if you're comparing these 2 quarters, again, is INR 1.67 crores against a nil that we had in that quarter last year.
Okay. So it's -- you have only 2 elements, right? There's nothing more to it?
Absolutely.
And this realization impact that you do was on price reduction or is the -- the mix or something else?
It's the mix, in terms of our broker mix, because as you know, we have some sort of a tiered pricing. So we'll see as volumes have slightly grown faster in the larger brokers, the realization grows slightly lower because they are the ones who have the benefit of the 2-tier pricing that we have.
And sorry, what was the number you said on LES, that absolute number was?
So the absolute number for this quarter was INR 1.67 crores.
All right. So that's like 3 percentage -- it was between 3 percentage points, okay?
Yes.
But still, it's still only at a 2 -- or 6% gap, right, between traded volumes and the revenue growth?
Just check it out again, because I just start from ADT movement, minus realization, gives you the transaction charges. And then that, you take away the LES, you should come to the same percentage movement.
Yes, that's what I'm doing. So I mean, the realization came to about 1.3%, 1.4%, right? And your LES of about, let's say, 3%. So that still gives us about only 4% to 4.5%, right? So it still doesn't the balance 1.5 percentage point.
Sure. Sanjay will send you the working separately, if there's a disconnect there on that number.
Sure. So that would be good to know. Just quickly, is there a budget on absolute amount for LES?
No, like I said, we had an initial period, which we thought we'd run the LES for a longer period. We've already spent, as I mentioned, INR 2.4 crores, in the first half of the year, but we have no intention of continuing LES. We have discontinued the LES scheme as of today.
[Operator Instructions] The next question is from the line of Amit Chandra from HDFC Securities.
So I want to understand like as the competition in the commodity derivatives segment increases, so can you see some risks to our realizations, because still these realizations are on a higher base?
So I think when we're talking about the realizations, we're just talking of the absolute fee numbers. And as I just explained to another question asked before, the sort of volumes that we have seen in the initial period gives us the comfort that, really, liquidity is not moving. If at all, there is some more liquidity getting built up in another exchange, which is a great thing because the market may be expanding. So from that perspective, at this point in time, we don't see too much of a pressure in terms of the realization and that's something which we feel very confident about.
Okay. So in your introduction of the members, so the 9 members who are there, so kind of firstly, I want to understand the concentration of the members. And have you had any interaction, faced any kind of any issue, whether it be members wanting to shift to NSE or BSE because it's more favorable to trading all the segments in one exchange?
So I think we are in constant touch with all our large members, and with all the other participants as well, it's not just the large ones. But specifically to your question, has any of the larger members expressed any reason why they believe they should migrate? We haven't had any of this concern expressed. It's like as we have reiterated in the past as well. We believe that liquidity is very sticky. And as long as we can continue to provide a product on a platform which is absolutely well-liked by the people, we should not see liquidity go away. There is no other benefit people would also get by just moving as well, because again, in terms of moving your capital between segments, it takes anywhere between 20 to 25 minutes, even if you have to move it between the exchanges today. So that's not a big advantage from a broker's perspective, even if there seems to be an advantage otherwise.
So from an exchange point of view, what steps then they could take to ensure that they would [ not have ] that movement? And what steps...
One, we make sure that our products remain relevant. Second, we make sure that our technology performs at its best. And last but not the least, having engagement with the members so that they will continue to feel comfortable trading on the MCX rather than move anywhere else.
Okay. And so on the costing part, so I know the cost, I know the cost margin has been pretty decent. So from here on, what kind of cost increases we can see?
So I think we've been consistent with what we have said. I think on a quarter-on-quarter basis, you will see the cost discipline that we have demonstrated. On a year-on-year basis, we have maintained consistently. And again, if you take the 6 lines that we report in our quarterly results on the website, on the BSE website, the first 3 -- employee benefits expense is something which is more like a fixed cost, but the next 2 are, I mean, mainly the product -- so software support, product license fees, are a fully sort of variable cost. But combined, we have said that we will remain within a 2% to 3% year-on-year increase, and we expect to maintain that for at least the next 2 to 3 years.
Yes, but because the computer and tech expenses on a 6 months Y-o-Y basis is down around 18%, so can you see some increased expense on the computer and tech expenses?
So again, this is something where some of the incremental benefit that you're getting is because there may be some older technology which we are either paring away or there are certain expenses you don't pick up anymore on the computer because you've done automation. But in terms of an expectation, like I said, you should look at the overall numbers, and in that sense, you should track it to a 2% to 3% year-on-year number. Specific line items, I think, will be difficult to give you any forecasts.
The next question is from the line of [ Ganil Gerhad ] from [ Vertu ] Capital.
Two follow-ups from my side. One, now you see increased competition, I think, do you have competitors that are entering into non-agri segments? And another one, it seems that the kind of participation that you are expecting from is to an extent still lacking. So the pie is not expanding there. So do you see the segment is getting crowded out? And what, if at all, what we are doing in terms of ensuring that we launch new products in the same segment? If you can elaborate on that.
So while again, I don't see so much of crowding out happening, I do think that from a liquidity perspective, it should remain at one trading point, and we don't see why it should migrate away. In terms of new product launches, yes, we continue to explore the market, but as we say that, I think we also have to look at whether there are really meaningful trading opportunities and meaningful products are there, as we have explained in the past. Many of these products, especially in the agricultural segment, are sensitive, have had history where there has been regulatory interventions. With all of that, I think it is very difficult to get into those products. And in the non-agricultural segment, there are very few commodities now left which are permitted for trading in India and have not been explored by any of the exchanges.
Okay. Okay. And so my second question regarding -- around the SEBI. Yes, I think you mentioned that from this quarter onwards, you are going to stop LES, because we have not seen the kind of traction that we were expecting on the gold side. So now, what are the other moves left with us to ensure that we scale up on the option traders and the [ gains ] apart from LES?
So I think the sort of scaling up that we've seen prior to LES and the sort of scaling up we're seeing in the other products that there was no LES, is all driven by the fact that we have been aggressively pursuing member participation, investor education, and that is the only way to go in terms of getting this product across to more people. So the strategy will still remain to get many and more brokers onboarded. And then to get as many more clients onboarded through investor awareness.
But do you really see a challenge in terms of there are 11 kinds of product to the end customer, whether the options products that are being kind of allowed by the SEBI and they are developing work of. Is that, is that a bottleneck in terms of participation from the end users?
I think...
I think the options [ trading ] in the future and things like that, which is not the normal way how the markets operate.
Just, I mean, on that one, I think, yes. We could do it more, product innovation. But I think, if I must say that within the current ambit what is available is not a big constraint, so I don't see that to be a limiting factor for growth of options.
The next question is from the line of Nimit Shah from ICICI.
So with unified broker license and unified exchange coming in, what is the view on margin fungibility?
So I think the benefit of margin fungibility to the end client has already materialized and is being fully exploited by clients and by the market with the unified membership that is available. And many clients are already very, very happy using that, because as an end client, if I am engaging with a member who has the participation on different exchanges, for the end client, it is still all on one screen and the margin is fast-moving. In terms of its impact for the members, it's one that is -- there isn't yet a real opportunity, because we don't have, say, a currency or an equity segment, and the other exchanges still don't have a meaningful commodities segment. So from a broker perspective, that's not something which is A, a possibility today; and B, to the extent they want to move capital, I think moving capital between say, NSE's equity to our commodities segment or vice versa, just takes you half an hour, so it's not something which is a big advantage in this.
But here, the member has to keep a separate margin at every exchange?
That is required. That, in defense, even at the same exchange, also, you still have to demarcate your margins between the different segments.
Okay. And this will remain even after interoperability cuts both ways?
I would guess so, but I think we need to see the contours of how interoperabilities will work in the equities segment before we comment on that.
Okay. And the time line which you mentioned, could take only half an hour to move margin across exchanges. But here, it used to take more than a day, I think, right, or it was...?
So I think we're talking now that both -- and I'm aware that the other 3 exchanges, that we are both allowing members to withdraw inter-day capital and even if it is cash, we pay it out within 30 minutes now.
Okay. As of -- as against earlier, it used to take more than 24 hours?
Absolutely. It used to be a full [ personnel ] activity, it's been cut down to 30 minutes.
The next question is from the line of Rohit Balakrishnan from VRDDHI Capital.
Yes, so I just wanted to understand one thing. Any update or anything that you would like to share in terms of participation from corporate? Like any update? Because I think last quarter, you mentioned that there's something that is still quite a lot a work in progress, so anything that you would like to share on that one?
So I think we continue to see good progress in terms of corporate participation. It's also evident in this sort of open interest buildup that we have seen. And of course, in some products, it's more than the others. So like I mentioned at the beginning of the call, in gold, it's a very good story, because it's been aided by the fact that some of the larger corporates, which used to hedge internationally, are now being forced to hedge domestically and that's adding in a big way. But other than that, I would say in terms of the progress we wanted to make through the year, we continue to do that in terms of our plan numbers, and the incremental corporate that we are getting is quite good.
Got it. And the other thing was in terms of, as you mentioned, the last couple of months, 40, 45 days, the ADT has seen an increment uptick from the current numbers as well. So I mean, in terms of the drop in realization, however margin it was, and given that now, the LES is now away, so will you -- would it be fair to think that the uptick in ADT, it should also lead to an uptick in volume, which [ coincidentally ] didn't happen in the last quarter?
So I think it's difficult to predict what will happen in terms of realization, because concentration could change at any point of time, and therefore, you could still have a little impact coming, either on the positive or the negative side, due to a change in realization. But yes, other than that, like you pointed out, with LES going away, that the straight INR 1.67 crores difference you should see in the next quarter.
The next question is from the line of a [ Sarab G ] as a shareholder.
This is [ Sarab ]. I have a couple of questions. The first one is regarding the book value. In the [ PPT ], I could see that it's 240 now compared to 271 on a consolidated basis. Any thoughts or light in terms of how this has reduced?
Yes, so this is on account of dividend distribution, which happened, if I'm not mistaken, in first week of September.
Okay. So that'd be INR 17 per share, and that's the dividend taxation, distribution taxations. Where in -- within the fine print, I think under these GAAP and inter -- in the profits, help me to tally in terms of is there any there the complement apart from dividends and dividend distribution?
No, not really.
There's some disconnect there. Probably -- I know that can be clarified in the -- later. The calculation part, I don't know. That is one thing. Now I'm not going to get into the micros, but clarification on the realization, whenever this detailed description is posted. Number two is, regulators like SEBI and RBI have been liking only hedging and others to be talking about the Jindals in the trading. So does it mean that you can enlist [ the MBSE ] how to significantly immerse on the other part of the ecosystem, like the analysis and the delivery-based items. Did that -- do you think MCX has a better advantage compared to NSE, do you think? That is one. And a related question is, could we know what is roughly the amount of the derivatives-based trading on an overall basis? And here, it used to be less than [ 3% ] on an overall basis in a financial year.
So I think there is no change in the delivery percentage that you're talking of. It's roughly in the same range. Your second question, I think as a regulator, they are obviously keen to see hedgers participate and then that hedger's participation is linked in some ways to physical participation, but it's not mandatory. There are enough hedgers who participate, even on MCX, and they don't really take or give delivery. But yes, the fact that the regulators want more hedgers to participate means that you need to create products so deliveries can be made, and that would require investment in warehousing and the whole ecosystem, which having done that over the last so many years, is something which we believe is an excellent advantage for MCX when it comes to a competitor.
By any chance, will it significantly jump from the current level of around 2% to 3% to probably beyond 10%, because of this kind of regulation and how the regulators want it in the future? But obviously, you cannot, not based on any scientific method, your gut feeling?
Yes, gut feel, I don't think it's changed so much. Even amongst the best and most liquid exchanges in the world, where everybody hedges today, like the LME and the CME, the percentages are very similar.
Fantastic. So the final question from me, you had said something about the 7.5 tons to 15 tons regarding this gold to open position. Something similar to that, I know like maybe there are a lot of corporates going out there in the exchange doing hedging, is there any real development happening there for that? They will not go, say, and do more within India. Just like how you said that probably the gold companies, they are doing it now and acquiring from that?
So I think, essentially, this was a regulatory intervention, but from a market perspective, we need to make sure that our markets become more liquid and that they provide a longer-term hedge, and that's what will attract the international investors to come back here. Currently, the fact that we have CTT, we have other taxes, makes some of the aspects of our market not very efficient and therefore, as these taxes keeps happening, we will have investors investing overseas.
Ladies and gentlemen. That was the last question. I now hand the conference back to the management for their closing comments. Thank you, and over to you.
Thank you, again, all. To those for whom we said we'd send back some clarifications, we will do that. Just want to reiterate again, what we started at the beginning of the call. We had a good quarter in terms of our numbers. Volumes are looking very healthy. And to all of you where we have told you that we will do a couple of things, one which is manage the manager groups, which we are consistently doing now, by holding our expense line to what we have said, and we will continue to do that. Second, trying to manage those unmanageables and reducing those and therefore, that you will see in our other income as we progressively move away from long-dated instruments and have lesser volatility on our income. And then keep trying to manage the environment to make sure that we can influence people to participate on the exchange, which will hopefully drive up the volumes.With that, thank you. Have a great evening, and thanks for joining us on the call.
Thank you very much. Ladies and gentlemen, on behalf of Multi Commodity Exchange of India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.