MUMBAI: Bank-sponsored stock brokerages are gearing up to enter the commodity derivatives space, a move which is expected to mobilise retail investors for these products and help the markets grow manifold, say industry experts.
The Securities and Exchange Board of India (Sebi) had in September allowed brokers of stock and commodity exchanges to do both the businesses under one entity.
The regulator has given the go-ahead for a unified exchange system, to come into effect from October.
Accordingly, stock exchanges NSE and BSE are working towards launching commodity derivative segments which is likely to throw up a challenge for existing commodity bourses — NCDEX and MCX.
"With the entry of bank-sponsored brokerages in the commodity trading space, the turnovers of commodity markets are likely to increase manifold as it would expose commodity derivatives to mass retail customers," Axis Securities chief business officer Amit Golia told PTI.
"Our strategy would be to activate existing equity derivatives trading clients to start trading in commodity derivatives as well. As of now, there is no incentive planned; however, the strategy will be to cater as much as possible to the traders in terms of the technical research ideas by presenting opportunities to make the most of their money," Golia added.
Axis Securities has applied for licences with MCX and NCDEX as these exchanges are the leading turnover generators for bullion and agricultural commodities respectively.
Kotak Securities MD and CEO Kamlesh Rao said that with Sebi enabling consolidation of commodity and equity broking business, both at member level as well as at the exchange level, the brokerage is open to exploring organic and inorganic opportunities in this space.
"We intend growing the commodity and broking business and capitalise on synergies between common customers," he said.