MCX - Multi Commodity Exchange of India Ltd Share Price

1. Question: What is driving the growth in the number of traded UCCs, and do you expect this to grow in upcoming quarters?

Answer: The growth in UCCs stems from two key factors: a focus on enhancing user experience across our trading platforms and the onboarding of new members. Our efforts to align experiences between equity and commodity trading have encouraged participation. We anticipate that this momentum will continue, given the significant headroom for growth in the commodity derivatives market.

2. Question: Does the increase in gold and silver deliveries lead to additional costs for the company, and how do you manage short deliveries?

Answer: No, there's no additional cost because these deliveries are managed through our existing warehouse arrangements, and the expenses are covered by participants. In case of short deliveries, established guidelines and penalties are in place to handle such situations efficiently without financial burden on the exchange.

3. Question: How do you assess the need for technological enhancements given the increased activity?

Answer: We are in a continual investment mode to keep our technology up to date for managing growing turnover efficiently. We have seen significant increases in order volumes this quarter and expect this to sustain. Our strategy includes ongoing assessments and enhancements to our technological capabilities to handle future demand and volatility.

4. Question: What is the progress on increasing volumes in base metals and index options?

Answer: We are seeing growing traction in base metals like copper and zinc, which is promising. For index options, there's minimal traction so far, but we expect futures momentum to facilitate future growth in options. Our strategy involves ongoing engagement and support for all segments, including base metals.

5. Question: How do you view the headroom for growth in retail vs. institutional participation?

Answer: While we see significant opportunity for retail participation, we recognize that commodities may not suit every investor. UCC numbers do encapsulate various investors, but institutional participation is less pronounced. We see potential for growth in both retail and institutional segments, given current market conditions and expanding investor interest.

6. Question: Will margin requirements increase due to the volatility in gold and silver?

Answer: Margin requirements are dynamically adjusted based on market volatility. As conditions change, daily assessments determine if additional margins are needed. While higher margins do create operational constraints, they ensure our risk management framework is robust, maintaining participant integrity and market stability.

7. Question: How prepared are you for potential regulatory changes regarding market competition?

Answer: We acknowledge the risk from increased competition and remain vigilant. Our strategy is centered around consistent innovation, improving product offerings, and enhancing participation. We believe that by focusing on these areas, we will secure our position in the commodity derivatives market despite competitive pressures.

8. Question: Can you quantify the required SGF given the increase in volumes?

Answer: The SGF is determined by SEBI guidelines. We regularly assess and strengthen our SGF to provide a safety net for transactions. While I can't give specific numbers, we are focused on being well-prepared to manage participant defaults effectively while maintaining robust risk management practices.

9. Question: What are your thoughts on increasing the dividend payout ratio given your cash flow?

Answer: While free cash flow generation is strong, decisions around dividend payouts will be made at the year's end, factoring in our growth strategy and technology investment needs. We prioritize sustainable growth alongside shareholder returns and will consider all aspects before final decisions are made.

10. Question: How do you see volumes changing if gold and silver prices drop?

Answer: Volatility is intrinsic in our operation, and while current volumes are strong, future performance depends on market conditions. A wide array of factors influences activity levels, and while we can't predict extreme scenarios, we expect derivatives trading will continue to play a crucial role amid price fluctuations.