Q1FY26 debut record INR406 cr (+60% YoY) set the table.

Number of traded UCCs have seen a significant jump sequentially. What is driving this growth and do you expect these numbers to grow in upcoming quarters?

We have at the heart of this growth in UCCs, 2 contributing factors. One is really an exercise in exploring and aligning the user experience across members for commodity derivatives trading. Members have looked at the opportunity that they seek for commodity derivatives market, what their users are looking for and aligned the experience to be a common experience, be it equity investing or commodity derivatives investing. Alongside that is also the fact of new members who have come into our fold that has contributed to new UCCs coming in along with those members. At least for rest of the year, we do expect to see a certain momentum continuing. There is headroom from where we stand today to what is the potential.

When you speak about headroom, are you talking about more headroom within new members, or also other members big or active on equity who haven't started offering commodities?

I think headroom is both. Headroom comes from both at a larger business level. But certainly, when it comes to UCCs and you see participation at India level, we see headroom there.

Gold and silver delivery has increased on our platform. Does this lead to additional cost for the company? And in the event of short delivery, what is the liability on the exchange?

There is no additional cost to the company because these are managed as part of warehouse negotiations and what participants pay for the services. We are quite happy to see this sort of healthy delivery happen despite global conditions. On potential impact of short delivery, there are guidelines and rules that manage that circumstance, by way of penalties and so on and so forth. These are well-established processes, and they have happened in the past, and they happen on an as-and-when basis depending on market conditions, and we are well equipped to handle that.

So far, are there any instances in the last 3, 4 months where there has been short deliveries?

No, nothing abnormal.

On volume uptick - we're focusing on metals contract as we see decline in volatility, to diversify portfolio. What is the strategy update on metals? Also on indices and index options launched, we are seeing minimal traction. Any update on index option side?

On base metals, it's not just base metals, we have 4 segments, agri, metals, bullion and energy, and we are trying to focus on all of them. In base metals, we've already seen traction in the copper futures and options. We are seeing a lot of traction on the zinc options and futures as well. Nickel, which we launched this year only, now we are seeing good volumes and a healthy buildup of OI. On the index, while we did launch index options, we haven't seen the kind of traction we were expecting, however, on index futures, we have seen good traction building up, and we hope that once the futures get good momentum, options will follow.

Base metals jump - we earlier alluded to challenge in base metals with multiple delivery centers. Have we modified that and consolidated delivery centers? What has caused the sudden increase in base metal volumes?

There is a quarter-on-quarter growth of 156% with a year-on-year of 77%. There are a couple of actions that we took explicitly. Number one was consolidating warehouses. We've done that for copper. Copper has moved to a single warehouse. This was based on study of numbers of deliveries that happened across warehouses and also the market feedback that we had from the members that they were looking for this kind of modus operandi to simplify the contract transparency for them. We've also had a lot of market engagement with reference to GST sort of queries - some lack of awareness amongst participants on how to handle GST as part of deliveries. In addition, number of members have set up commodity desks, they are very active. We are also in the midst of a bit of capacity building around commodities.

Do you plan to extend the change you've done for copper - single delivery center - to other base metals as well?

We are reviewing and we are consolidating. Nickel is operating in one center only as a relaunched new contract, which also had that other element of differential trading unit and delivery unit that was an action taken specific to Nickel. That started to give us good results on Nickel. On some of the other contracts also, we have started consolidating the primary warehouse and reviewing the other warehouses and some that are not very effective are also being rationalized.

On SGF, given volumes rising, we've seen consistency as a percentage of revenue - is that what to expect going forward? And bookkeeping - if you can split the revenue between futures and options?

Chintan, the revenue from futures was INR 227 crores for this quarter and options INR 380 crores.

On ability to handle these volumes - can we have any numbers in the sense, for example, if options goes to INR 1.5 trillion or INR 2 trillion plus futures, or premium goes to INR 15,000-20,000 crores ADT? Any volume levels till which you are comfortably placed?

We are well placed for a certain multiple of the volume that we have faced right now. And I'm saying faced because it's been a big multiple over the previous quarter and that quarter over the previous quarter and so on. So if you look at this kind of a momentum, we are well placed for at least 3x to 4x kind of a volume. But our intention and objective is to really be ready for more. In fact, market is telling us to be ready for a 10x volume. We've spoken about it also. So that's the kind of readiness that over time in an efficient manner that we will build up.

On margin requirement - given increase in volatility in gold, silver, precious metals, do you anticipate any increase in margin requirement required by the regulator? How does that function?

The margins are actually dependent on - I think you know that one of the primary factor is volatility. That is what decides your initial margin. And apart from that one, we also have additional margins and ELM. So, there is - fixed formula is there, it is more driven and it is - that means we look at what is the price movement in each of the commodity and the basis that on VAR based margins are going to be levied. Praveena Rai added: It's part of standard process. Every day, there is a margin calculation that happens based on current volatility price and so on. And immediately, that is then applied to market. So, it's not a one-off activity, though if we see the need and the requirement, there is an additional margin over and above that also - that gets levied. It's an ongoing activity.

So essentially, the risk that you are exposed to in terms of participant honoring their transaction is very low because of the margin requirement systems you have in place?

Yes. And we also do that M2M anyway, like because it happens on a daily basis. That why it is like the risk is limited to only not more than a day - single day, and that is well covered using the initial margin, which is the basis of our margins. Praveena Rai added: The regulatory framework, which defines the margin calculation and India is a conservative market in that sense. So our margins are the highest in the world and tend to go up quite steeply as volatility steps in. While this does lead to some sort of a constraint in the industry with members having to cough up larger sums for margin, it keeps us well managed from a risk standpoint. And of course, in addition to that is the SGF framework. So, both working hand-in-hand keeps us both MCX and MCXCCL very well protected as an exchange and clearing house.

When are we launching derivative on aluminum, Nickel?

For all products, there is a threshold of non-agri for INR 1,000 crores ADT in a complete 1-year cycle, post which only we can apply. So, whether it's aluminum or electricity, whichever contracts will we cross that INR 1,000 crores ADT threshold on futures, then only we can apply for options. So, we are ceased of that matter. And as and when we cross that threshold and we see that there is appetite in the market, we will definitely work towards that.

On product license fees - we saw significant growth in revenue QoQ, but product license fees hardly grew. As percentage of transaction income, it's 4.1% for the quarter vs 6-7% for previous 5-6 quarters. How does this work?

In terms of product license fee, you can read it off from the numbers on energy because we settle off international prices working with CME. So that's the part that contributes to product license fees. So, when bullion grows, etc., that doesn't lead to any direct cost to us because we settle on our own prices.

Out of INR 665 crores, INR 601 crores is transaction income. How much is coming from core float income, investment - float income that is from margin money, not other income?

It is around INR 45 crores.

From September to December to January - silver saw margin increase in Q3. Any other product where margin requirement went up other than silver in Q3 and even January till date? And by what percentage?

Yes, number of products. In fact, wherever volatility has been higher, it's gone up in gold, it's gone up in copper. Rishi Nathany added: Copper and even other metals gain - natural gas. Praveena Rai: In natural gas. I don't have a list in front of us, but it's gone up in a number of commodities. Praveen DG added: Silver if you take it is around 25%, then you have an additional margin. So gold is around I think around 10%. It purely depends upon the volatility in that commodity. On reversal - it is actually volatile based margin that basis that one automatically calculates what is the volatility in that margin because we use EWMA model. So, basis that one, it will estimate what could be the probable volatility and accordingly, the margins will be levied. So, the moment if there is a downtrend in the volatility, automatically, the margins would come down.

On risk to our monopolistic position, especially in bullion. We know what is happening with IEX, although we are governed by a different regulatory body. Do you anticipate any similar risks of maybe sharing the price discovery for MCX?

Competition risk does exist because other exchanges are also vying for share in this space. So we are cognizant of it, and we respect the environment in which we are operating. We do believe as long as we stay focused on our growth and innovative in our approach to products that meet the needs of the market, continue to grow participation, deliver to both technology, operational and risk management needs, we are well positioned to act as the commodity derivative exchange for India.

Has there been any activity from SEBI or any intimation shared with you about splitting the overall pie of the market?

We don't have any information like that, Parikshit.

Can you repeat the breakup for the futures and options revenue for Q3 FY '26?

Q3 futures revenue is INR 227 crores and options revenue is INR 380 crores.

Though we are well positioned in the overall ecosystem and we have not received any kind of intimation from any regulatory authority on different market participants entering into the segment, how do we see this risk?

No, the risk is real. I think we appreciate it and we respect it. We need to be prepared for it. And we are doing that by sort of enhanced activity, both on our product and the participation end. We have also increased a lot of market outreach with awareness programs, knowledge sharing programs with our members, continued innovation on the technology road map. So, I think the way to really hold forth is to be very positive and forward-looking in our approach and actions, and make sure we are executing to our plans.

Revenue for futures and options was INR 227 crores and INR 380 crores. The balancing figure comes to nearly INR 58 crores. Historically that has been INR 30-37 crores. What is the reason for the increase?

Aditi, that includes the float income and some other income, warehousing income from our subsidiary.

For other cost - if I remove software and technical expenses, product licenses and SGF contribution, then other cost is INR 23 crores. Could you explain the increase in this other cost?

Aditi, other expenses largely relate to administrative and office costs, CSR spend, legal professional fees, travel, business promotion activities. So, the increase is towards those activities only to increase the volume of business.

How will this work when prices for gold and silver may possibly come down? Do you see correlation between past growth of gold and silver prices with this increased activity?

The global factors around price volatility will play a role in addition to other contributing factors of participation, products and so on. So, whether it is price up or price down, volatility will bring in factors where the derivative exchange has a role to play. Having said that, if the extent of volatility were to sort of completely normalize, we will see the momentum of growth steady, though we do believe we will have new baseline over which the growth will be happening. There have been periods of time where energy has been volatile, and the exchange has played a role there. In recent times, we have seen bullion being far more volatile and exchange there. So, these macro factors will play a role.