Multi Commodity Exchange of India Ltd Directors Report.

Dear Shareholders,

The Board of Directors is pleased to present the Eighteenth Annual Report on the business and operations of your Company, along with the Audited Statement of Accounts and the Auditors Report, for the financial year (FY) ended March 31,2020 (year under review). The highlights of this Annual Report are given below:


The Companys financial performance for the year ended March 31,2020 is summarized below:




2019-20 2018-19 2019-20 2018-19
Total Income 48,177 38,472 50,311 39,859
Total Operating Expenditure 22,514 20,575 21,948 20,607
Profit before Interest, depreciation, exceptional items and tax 25,663 17,897 28,363 19,252
Less: Depreciation 1,784 1,529 1,814 1,545
Less: Interest 20 3 16 1
Less: Exceptional items - 2,380 - 2,380
Add: Share of Profit of Associate - - 4 43
Profit after exceptional items and Share of Profit of Associate but before tax 23,859 13,985 26,537 15,369
Less: Provision for tax 3007 335 2,887 745
Profit after tax 20,852 13,650 23,650 14,624
Add/(Less) : Other Comprehensive Income (net of tax) (187) (186) (199) (171)
Total Comprehensive Income for the period (Comprising Profit and Other Comprehensive Income for the period) 20,665 13,464 23,451 14,453
Earnings per share
i. Basic (Rs) 40.98 26.83 46.48 28.75
ii. Diluted (Rs) 40.98 26.83 46.48 28.75


The global financial markets faced new risks in 2019 owing to the US-China trade tensions, as well as, US-Iran geo-political tensions apart from the Brexit related uncertainties. As a result, returns on various asset classes were highly volatile, though accommodative monetary policies by most central banks enabled many asset classes to perform well. Global commodity markets recorded a robust growth in volumes during 2019 across all the segments, except for non-precious metals. According to data released by the Futures Industry Association (FIA), aggregate commodity derivatives volumes rose by about 14% in 2019.

However, the global commodity markets too were adversely affected by the COVID-19 pandemic and the restrictions put in place to arrest its spread. Weaker commodity demand and COVID-19 related restrictions leading to restricted output and even closure of production sites of key commodities, have in turn, resulted in unforeseen supply disruptions and a host of new unknowns. While the known unknowns can be managed, it is the unknown unknowns that pose the bigger risks, managing which has been one of the biggest challenges so far. Moreover, weaker demand and uncertain supply are being accompanied by other structural changes in global commodity markets, such as shifting of raw materials and changing consumer behaviour.

According to the June 2020 Global Economic Forecast of the World Bank, the global economy will shrink by 5.2% this year, which represents the deepest recession since the Second World War. Most advanced, as well as, emerging market economies are projected to witness negative growth by World Bank, with the Indian economy projected to decline also.

Your Companys performance during the year 2019-20 and outlook for the year 2020-21 has to be analysed against this backdrop.


The World Health Organization declared a global pandemic of the Novel Coronavirus disease (COVID-19) on February 11, 2020. On March 24, 2020, the government announced nationwide lockdown for 21 days to contain spread of COVID-19. This was extended multiple times till June 30, 2020 (for containment zones) with gradual relaxations. MCX remained operational during the COVID-19 lockdown period, as the exchange and related services have been classified under essential services and thus, exempted from lockdown restrictions.

In enforcing measures to contain the spread of the disease, and to avoid any disruptions to operations, the Exchange has been operating with minimum critical staff members at the office premises with the remaining employees working from home. To effectively respond to and manage the operations through this crisis, your Company triggered its business continuity management program.

During March, 2020 and April, 2020, the trading hours for commodity derivatives market were restricted to the first session

i.e. between 9 a.m. to 5 p.m. Consequently, the average daily futures turnover (ADT) on the Exchange dropped to Rs 12,171 crore vis-a-vis Rs 32,424 crore during the corresponding period of fiscal year 2019-20. After the restoration of normal trading hours for non-agricultural commodities from 9 a.m. to 11.30 p.m. from April 23, 2020, the ADT increased to Rs 23,099 crore during the period April 23, 2020 - May 28, 2020.

The operations of member brokers were adversely affected during the lockdown because of restrictive movements and dampened sentiments. This also contributed to the fall in ADT. Besides this, problems in labour availability, quality assaying and logistics infrastructure due to COVID-19 also adversely affected warehousing operations. Another major challenge was the non-availability of spot prices and dependency on alternative methods for deriving final settlement price.

Significantly, during the lockdown period, more than 2 lakh PAN based Unique Client Codes (UCCs) have been added to the Exchanges existing unique PAN UCC base. In terms of traded UCCs, the fall witnessed in average traded UCCs, is not significant.

The impact of COVID-19 on the business of the Company is covered under the Management Discussion and Analysis forming part of this Annual Report.


During FY 2019-20, the Company recorded stellar performance. The ADT of commodity futures contracts increased by 26% to Rs 32,424 crore during FY 2019-20, as against Rs 25,648 crore in FY 2018-19. This was the highest since imposition of Commodity Transaction Tax (CTT). The Average Realization Rate (ARR) decreased to Rs 2.10 per lakh from Rs 2.17 per lakh. The lower ARR was on account of increase in ADT leading to more Member brokers falling under lower transaction slab. The total turnover of commodity futures traded on your Exchange stood at Rs 83.98 lakh crore in FY 2019-20 as against Rs 65.91 lakh crore during FY 2018-19, an increase of 27.40%. The Bullion futures turnover increased by 93 per cent to Rs 29.15 lakh crore (Rs 15.13 lakh crore). The bullion segments turnover of Rs 35,112.36 crore on March 16, 2020 was the highest since the introduction of CTT. Turnover in the Energy contracts surged to Rs 38,13,027 crore from Rs 24,50,777 crore in FY 2018-19. Crude Oil futures and options clocked the highest ever turnover and volume since its inception., while that of base metals plunged to Rs 15,68,294 crore from Rs 25,25,601 crore in FY 2018-19, even though in terms of absolute volume, the total quantity of base metals delivery stood at 74,206 million tonne through the exchange mechanism. Agriculture futures turnover marginally slipped to Rs 1 lakh crore from Rs 1.01 lakh crore in FY 2018-19, largely due to drop in agriculture commodity prices. The number of agricultural futures contracts traded also decreased from Rs 18,28,722 in FY 2018-19 to Rs 17,89,350 in FY 2019-20.

During FY 2019-20 your Companys market share in commodity derivative space has increased to 94.01% as against 91.60% in the previous year. The volume (in terms of commodity futures contracts traded on the Exchange) increased by 20% in FY 2019-20, to 295 million lots, as compared to 246 million lots traded in FY 2018-19.

For FY 2019-20, your Companys (standalone) total income stood at Rs 48,177 lakh as compared to Rs 38,472 lakh during FY 2018-19, a growth of 25%. Increase in total income was mainly due to increased revenue from transaction fees. The operating income during the year under review was Rs 37,044 lakh as against Rs 29,835 lakh in FY 2018-19. Net profit after tax in FY 2019-20 increased to Rs 20,852 lakh from Rs 13,650 lakh in FY 2018-19 which has been the highest in last 7 years.

In accordance with the provisions of the Income Tax Act, 1961, your Company has availed the lower Corporate tax rate of 25% for FY 2019-20 (FY 2018-19 it was 30%). Further the Company has also utilized MAT credit in FY 2019-20.

The net worth of the Company as at March 31,2020 stood at Rs 1,54,652 lakh.

During the year, Honble Supreme Court has stayed Income Tax assessment proceedings on an appeal by the Company for Assessment Year(AY) 2010-11,AY 2011-12 and AY 2014-15, and the Honble High Court Mumbai had earlier admitted the matter for AY 2012-13 and AY 2013-14. Further on the basis of Special Audit Report, Assessing officer has passed assessment order for AY 2015-16 determining demand of Rs 644 lakh ( including interest of Rs 242 lakh). The Company is contesting the

above demands in addition to demands raised in previous years. The management believes that the Company has a fair chance of getting favourable orders and therefore ultimate outcome of these proceedings will not have a material adverse effect on the Companys financial position and operations. Accordingly, no provision has been made as on March 31,2020 and the Income tax Demands for the said Assessment Years are shown under contingent liabilities.


There has been no change in the share capital of your Company during the year under review. As on March 31,2020, the paid-up share capital of your Company stood at Rs 5,099.84 lakh comprising 50,998,369 Equity shares of Rs 10 each fully paid.

Your Company has, during the year under review, neither issued any Equity shares with differential voting rights nor any shares (including sweat equity shares) to its employees under any scheme save and except transfer of shares by the ESOP trust to eligible employees pursuant to the Employee Stock Option Scheme (ESOP 2008).


For the year ended March 31, 2020, your Directors do not propose to transfer any amount to the General Reserve. An amount of Rs 1,15,055 lakh is proposed to be retained as surplus in the Profit and Loss Account.


Pursuant to Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as the SEBI Listing Regulations, 2015), your Company has formulated a Dividend Distribution Policy which is attached as Annexure I to this Report. The same is also available under the weblink: relations/corporate-governance.

The Board of Directors of your Company have recommended a dividend of Rs 30 (300%) per equity share on a face value of Rs 10 per share for the financial year ended March 31,2020, subject to the approval of shareholders at the ensuing Annual General Meeting.

In view of the abolishment of the Dividend Distribution Tax w.e.f. April 01, 2020, the outgo on account of the proposed dividend of 300 % (Previous Year 200%) to be paid by the Company aggregates to Rs 15,300 lakh, being a payout of 73.37% of the profit after tax (PAT) for the year ended March 31,2020, as against Rs 12,297 lakh (including Dividend Distribution Tax rounded off to Rs 2,097 lakh).

Your Directors have recommended the dividend based on the Companys performance and in view of the adequacy of existing cash / cash equivalent at its disposal to provide for capital expenditure on technology development and new business initiatives.


Your Company had not invited any deposits from the public, and as such, no amount of principal or interest related thereto was outstanding as on March 31,2020.


The details of loans, guarantees and investments under the provisions of Section 186 of the Companies Act, 2013 read with the Companies (Meetings of Board and its Powers) Rules, 2014, as on March 31, 2020, are set out in Note 48 to the standalone financial statements of the Company.


MCX is a full member of the World Federation of Exchange (WFE), the global industry group of exchanges and Central Counter Parties (CCP).

MCX Crude Oil futures, MCX Crude Oil mini futures, MCX Natural Gas futures, MCX Gold Mini Futures, MCX Silver Micro Futures, MCX Silver Mini Futures, MCX Copper Futures, MCX Nickel Futures, MCX Zinc Mini Futures and MCX Crude Oil Options were amongst the top 40 commodity futures and options contracts in the global ranking of commodity futures contracts in the Calendar Year 2019 (CY19). (Source: FIA Annual Volume trading statistics January 2020).

With an aim to seamlessly integrate with the global commodities ecosystem, MCX continues to have strategic alliances with leading international exchanges viz. CME group, Dalian Commodity Exchange (DCE), London Metal Exchange (LME), Mozambique Commodities Exchange (BMM), Taiwan Futures Exchange (TAIFEX) and Zhengzhou Commodity Exchange (ZCE). MCX has also tied up with various trade bodies, corporates and educational institutions across the country to improve trade practices, increase awareness, and facilitate overall improvement of the commodity market.


As per the SEBI directives, the Exchange aligned the trading unit and delivery unit of Gold Petal (Igram) contract to 1 gram, applicable from October 2019 contract onwards. Earlier, the trading unit and delivery unit were 1 gram and 8 grams respectively. The newly designed one gram Gold Petal futures contract (first ever deliverable one gram Gold contract in the world) saw a successful delivery of 8.27 kg (8274 coins) since its launch in October 2019.

Further, as per SEBI directives, Silver Micro 1 kg contract was converted from Both Option to Compulsory Delivery. Also, the Exchange aligned the trading unit and delivery unit of Silver Micro contract to 1 kg from February 2020 contract onwards, from the earlier trading unit and delivery unit of 1 kg and 30 kgs respectively. Silver (1kg) Micro contract that became deliverable with Silver one kilogram bar as delivery lot from February series, has seen successful delivery of 454 kg in its first-ever delivery cycle. 1 kg Silver bars of Hindustan Zinc Ltd., which has become an LBMA approved refiner recently were also delivered for the first time via this contract.

The Bullion segment attained various landmarks during FY 2019-20.

On July 5, 2019, the Union Budget 2019 proposed that the increase of custom duty on gold and other precious metals be increased from 10% to 12.5%. Since price quotes of MCXs bullion contracts was inclusive of customs duty, there had been a sharp increase in the price of these contracts.

The segment recorded its highest turnover of Rs 35,112.36 crore on March 16, 2020 since the introduction of CTT. Gold (all variant) recorded its highest turnover of Rs 22,207.33 crore on March 16, 2020, post imposition of CTT. Further, in FY 201920, MCX witnessed the highest ever Gold delivery in a single-contract of 5.16 MT in August 2019. Additionally, Silver (all variant) clocked its highest turnover of Rs 12,905.03 crore, as well as, registered the highest volume of 3,503.57 MT on March 16, 2020, post imposition of CTT.

Further, the Gold option Open Interest hit all-time high of 8.75 MT on March 20, 2020. Silver Options registered record turnover of 406.52 crore and volume of 84.36 MT on February 25, 2020. Also, Silver Options registered record Open Interest of 98.76 MT on August 28, 2019.

A product profile for Bullion has been hosted on the website of the Company to help investors understand the physical market dynamics which influence the trading on the Exchange.


MCX Energy contracts which have been the front running contracts of the Exchange saw further growth across all parameters.

The Crude Oil Futures & Options Contract attained various milestones during FY 2019-20.

MCX Crude Oil Futures clocked the highest ever turnover of Rs 28,440.33 crore on January 8, 2020, as well as, registered the highest ever volume of 77.62 million barrels on February 28, 2020, since inception (February 2005).

MCX Crude Oil Options clocked its highest ever turnover of Rs 2,743.21 crore on January 8, 2020, as well as, registered the highest ever volume of 6.35 million barrels on March 06, 2020, since inception (May 2018). Also, MCX Crude Oil Options witnessed highest ever Open Interest of 2.86 million barrels on February 11,2020, since inception.

As per SEBI directives, the Exchange delisted Crude Oil Mini (10 barrel) contract from January 2020 contract expiry to restrict to single contract per commodity.

Agricultural basket

The Exchange launched a new commodity in the Agriculture basket i.e. Kapas contract (4 MT) on September 30, 2019. The participation has been good and the Exchange is striving to achieve new milestones in the current financial year.

The Crude Palm Oil futures contract registered highest intraday turnover of Rs 778.9024 crore (single sided) post imposition of CTT.

The Cotton contract that was launched in the year 2011, has gained significant traction and the Exchange has achieved highest deliveries of 3.98 lakh bales (1 bale = 170 Kgs) in the season ending in August, 2019.Following SEBI directives, the Exchange has aligned its delivery lot (100 bales) of Cotton contract with its trading lot (25 bales) w.e.f. from January 2020 contract expiry.

The Exchange has also aligned the delivery lot and trading lot of Mentha Oil contracts to 6 drums w.e.f. June 2020 expiry, from the earlier delivery lot of 12 drums and trading lot of 2 drums.

Base Metals

All Base Metals contracts were converted to Delivery Based Settlement mode from Both Option Settlement Mode in a phased manner starting with Aluminium contract from March 2019 and ending with Copper contract in July 2019 in a shortest period in 2019. The contracts have successfully completed a year post conversion.

Based on regulatory guidelines, the trading unit and delivery unit for all the futures contracts had to be aligned and only one single contract having same underlying was permitted. Accordingly, for each metal, only one contract specification is traded on the Exchange.

Presently, in the case of Aluminium, Zinc and Lead, 5 MT contracts are traded on the Exchange platform and all other variants has since been discontinued. The Trading and Delivery unit of Copper has been changed from 1 MT to 2.5 MT and for Nickel from 250 kg to 1.5 MT.

MCX Base Metal contracts saw 75025.5 MTs of metals delivery via MCXCCL during FY 2019-20. The maximum quantum being delivered was in Aluminium of 25487 MTs during the FY 2019-20.

Post conversion, base metals saw a peak in deliveries in October 2019 with 10557.5 MTs of metal being delivered into the warehouses.

During the year under review, MCX was able to create a diverse list of Spot Polling participants involving traders, consumers and producers. These numbers have been increasing on a continuous basis.

Transaction fees

To develop market depth and liquidity in far month contracts and encourage participation across commodity segments on the Exchange, the Exchange levied flat transaction fees of Rs 130 per crore of turnover in far month futures contracts for a period of one year, with effect from January 01,2020.

Further, in order to encourage active participation in the market, the Exchange continued to waive transaction fees on all commodity options contracts till March 31, 2021. During FY 2019-20, options ADT (excluding Muhurat Trading day) increased by about 60% to Rs 1,131 crore vis-a-vis Rs 707 crore in the previous year, led by about 119% increase in participation.

Market Participants

As on March 31,2020, the Company has national reach with 692 members, having 54,900 Authorised Persons, operating through 2,287,508 terminals connected through various available modes of connectivity ( including Computer to Computer Link (CTCL), Internet Based Trading and Wireless Trading) across 1,010 cities/towns across India.

The unique traded client codes, which is of significant importance to Exchange, witnessed a jump from 3.085 lakh in FY 2018-19 to 4.001 lakh in FY 2019-20.

Consequent to the Reserve Bank of India (RBI) permitting subsidiaries of banks to offer broking services for commodity derivatives segment of SEBI recognised stock exchanges, six bank (broking) subsidiaries have registered with the Exchange as on March 31, 2020.

On the institutional front, SEBI has given approval to Deutsche Bank, Orbis Financial and Stockholding Corporation to provide custodial services in commodity derivatives segment. This has paved the way for Mutual funds, PMS and AIF (Cat III) to participate in Exchange traded Commodity Derivatives.

During FY 2014-15, your Company had filed 9 applications seeking compounding of offences of earlier years, under Section 621A of the Companies Act, 1956, against the Show Cause Notices received from the Registrar of Companies, Mumbai. Compounding had been effected in respect of 8 applications and the Company had paid the fees imposed by the Compounding Authority relating thereto aggregating to Rs 7,43,000/-. The Company had also received the copy of the Orders passed by the relevant authority in respect of the 8 compounding applications. As on March 31, 2020, one compounding application is pending for hearing with the Regional Director, Western Region Mumbai. Details relating to the same are given in the Extract of the Annual Return in Annexure IV.


During the year under review, SEBI, the sectoral regulator permitted introduction of new products and newer participants in the Commodity Derivatives Market. The market regulator has been taking steps to strengthen the risk management framework in the commodity derivatives segment of stock exchanges. Measures such as enhancing the Margin Period of Risk, imposing Extreme Loss Margins, determination of Lean period and levy of additional lean period margin, enhancing the Settlement Guarantee Fund etc. have helped to strengthen the risk management system of exchanges. These measures are expected to build the trust of investors and other stakeholders in commodity markets and attract their participation.

In an effort to bring the Indian market in line with global markets, SEBI has directed commodity exchanges to align trading lot sizes with delivery lot sizes to remove barriers in physical delivery of commodities and adhere to global standards.

The important Regulatory developments during FY 2019-20, inter alia, were as hereunder:

April 2019

i. SEBI (Prohibition of Insider Trading) (Amendment) Regulations, 2018, were notified effective from April 01,2019;

ii. SEBI has revised the fee structure for stock brokers and exchanges w.e.f. April 01,2019;

May 2019

iii. To promote institutional participation, SEBI had amended the SEBI (Mutual Funds) Regulations,1996 and the (Portfolio Managers) Regulations, 1993 enabling Mutual Funds and Portfolio Managers to participate in commodity derivatives segments;

iv. SEBI had issued guidelines for "Combating Financing of Terrorism (CFT) under UAPA, 1967". In view of the reorganization of Divisions in Ministry of Home Affairs and allocation of work relating to countering of terror financing to the Counter Terrorism and Counter Radicalization (CTCR) Division, Government has modified the earlier order dated August 27, 2009 by the order dated March 14, 2019;

June 2019

v. SEBI permitted Recognised Stock Exchanges with commodity derivatives segment to introduce futures on commodity indices. Construction of commodity indices shall conform to the guidelines prescribed by SEBI;

vi. SEBI had brought about uniformity of approach while handling of clients securities by Members and provided guidelines in this regard. Also SEBI advised exchanges, clearing corporations and depositories to put in place a mechanism for monitoring with respect to handling of client securities by the members;

vii. To bring uniformity in depositing of penalties levied on clients for short collection or non-collection of margins in the commodity derivatives segment, SEBI directed clearing corporations and exchanges to deposit such penalties in Core Settlement Guarantee Fund (SGF);

July 2019

viii. SEBI has eased the conditions for exchanges to provide incentives under liquidity enhancement schemes (LES) in the first five years of operation from the date of SEBI approval for commencement / recommencement of their business subject to the adherences to the conditions;

ix. SEBI has disallowed multiple contracts on the same commodity after December 2019 except for Gold, Silver and Precious metals contracts;

x. SEBI fixed the minimum duration of the staggered delivery period at five working days for all commodity futures in order to bring uniformity in the timeline across exchanges;

August 2019

xi. As directed by SEBI, the stock exchanges and clearing corporations have in consultation with one another, devised a standard framework for imposition of fine on the Trading Member/ Clearing Member for incorrect/false reporting and non-reporting of margin collected from the clients;

xii. SEBI has eased the process of providing SCORES credentials by automating generation of SCORES user id and password for new SEBI registered intermediaries;

xiii. SEBI directed exchange dealing in commodity derivatives segment to constitute a Product Advisory Committee (PAC) for each group/complex of commodities having common stakeholders/value chain participants, in order to bring transparency in the design process for commodity derivatives contract and to cater the needs of the physical market participants;

October 2019

xiv. SEBI directed stock brokers and depository participants to provide information to exchange and depositories on Cyber-attacks, Threats experienced and measures taken to mitigate vulnerabilities. SEBI has also prescribed periodic audit for the purpose of compliance with Cyber Security and Cyber Resilience provisions by the stock brokers and depository participants;

November 2019

xv. Central Government has permitted the entities recommended by SEBI to undertake Aadhar based e-KYC facility to complete KYC of the client. These entities would be registered with UIDAI as KYC user agency ("KUA") and shall allow all the SEBI registered intermediaries / mutual fund distributors to undertake Aadhaar Authentication of their clients for the purpose of KYC through them;

xvi. SEBI has categorised as material/non-material modifications in contract specification parameters of commodity derivatives contracts. SEBI has defined modifications in contracts which can be made at the Exchange level after due notice to market and modifications which can be made only after approval from SEBI;

December 2019

xvii. The Central Government has made the Indian Stamp (Collection of Stamp-Duty through Stock Exchanges, Clearing Corporations and Depositories) Rules, 2019, to regulate the liability of instruments of transaction in stock exchanges and depositories which is effective from July 1,2020.


xviii. In order to keep pace with the technological advancements in the securities market, the existing Annual System Audit Framework and Terms of Reference for MIIs has been revised;

xix. SEBI in addition to options on commodity futures has allowed stock exchanges to launch option in goods in their commodity derivatives segment;

xx. SEBI had reviewed the Margin framework to strengthen the risk management framework in the commodity derivatives segment of stock exchanges. Measures such as enhancing the Margin Period of Risk, imposing Extreme Loss Margins, determination of Lean period in Agri commodities and levy of additional lean period margin has been prescribed;


xxi. For ensuring derivatives contracts are closely aligned to physical markets, all recognized stock exchanges shall review the performance of all contracts traded on their exchanges in commodity derivatives segment, as per the parameters laid down by SEBI;

xxii. SEBI has restricted use of securities for pledging and clearly given guidelines on handling of Clients Securities by Trading Members/Clearing Members;

March 2020

xxiii. SEBI has allowed that, henceforth members are not required to obtain Electronic contract note declaration form in which email id is required to be written in own hand writing from the client. By amending the said clause, the provisions for availing documents through electronic mode is now same in equity and commodity exchanges.


Your Company has put in place an Enterprise Risk Management ("ERM") framework to enable and support achievement of business objectives through identification, evaluation, mitigation and monitoring of different risks.

Your Company has a comprehensive Risk Management Policy for managing different risks such as Regulatory & Compliance risks, Technology risks, Business risks, Operational risks, Credit risks and Market risks. The Risk Officer of the Exchange ensures compliance with the Risk Management Policy throughout the organization. The head of each department is responsible for managing risks affecting their area of operations / business. The Risk Officer is responsible to review the risks associated with the functioning of the various departments of the Exchange and to identify the emerging risk and monitor the risk mitigation plan thereon. The Risk Officer also reviews the Internal Audit Report(s), suggests measures to improve control and identifies observations which can result in a risk to the organization.

The Board of Directors have constituted a Risk Management Committee (RMC) for, inter alia, identification, measurement and monitoring risk profile of the Exchange. As on March 31,2020, the Risk Management Committee comprised of three Public Interest Directors and an Independent External Expert. The Risk Management Committee periodically reviews the Risk Management Policy and its implementation thereon, as well as, the Risk Register that includes observations from Internal Audit. The Committee also periodically examines and evaluates the Risk Information Management Systems (RIMS) along with emerging risks, if any. The risks in relation to internal control over financial reporting is reviewed by the Audit Committee.

For details relating to Risks and Concerns of your Company please refer the Management Discussion and Analysis forming part of this Annual Report.


Your Company has set up Multi Commodity Exchange Investor Protection Fund (IPF), to protect and safeguard the interest of investors/ clients, in respect of eligible/legitimate claims arising out of the default of the member of the Exchange. The interest income on investment of surplus funds of IPF is used for imparting investor/ client education, awareness, undertaking research activities or such other programs as may be specified by SEBI.

Currently, the applicable IPF compensation limit is Rs 25 lakh per client, with no member-wise limit for SEBI-registered members declared defaulter on or after January 24, 2018. Further, the limits of Rs 2 lakh per investor per defaulter member and Rs 200 lakh per defaulter member shall continue to be applicable for claims against members, declared defaulter prior to January 24, 2018 and for non-SEBI registered members.

As on March 31,2020, the corpus of IPF stood at Rs 19,796 lakh (provisional).

In-order to enhance literacy and to promote participation in the commodity derivatives market, over 750 awareness programs were conducted under the banner of MCX IPF in FY 2019-20 to promote investor education and awareness. This includes 27 regional seminars conducted jointly with SEBI. These awareness programs were conducted in over 340 cities across India, for general investors, students, hedgers, jewelers, other physical market participants from the bullion/ metal industries and agricultural sector, farmers, FPOs, corporates, etc.

Some major awareness initiatives in FY 2019-20 were as follows:

i. World Investor Week (WIW) was celebrated from September 30, 2019 - October 06, 2019 throughout India under the aegis of SEBI & IOSCO. 60 awareness programs were conducted during WIW which had around 3200 plus participants;

ii. Awareness programs were conducted with several prominent Institutes and Associations including Institute of Company Secretaries of India, Institute of Chartered Accountants of India, Institute of Cost Accountants of India, National Bank for Agriculture and Rural Development (NABARD), IMC Chamber of Commerce and Industry, Indian Institute of Materials Management, , Gems and Jewellery Trade Council of India, India Bullion & Jewellers Association, Confederation Of Indian Industry (CII), Confederation of Indian Textile Industry (CITI), CSIR-CIMAP, Indian Institute of Plantation Management, India Lead and Zinc Development Association, Indian Electrical & Electronics Manufacturers Association, Associated Chambers of Commerce and Industry of India (ASSOCHAM), Commodity Participants Association of India (CPAI), Utkal Chamber of Commerce and Industries Limited (UCC&I) Calcutta Management Association, Ahmedabad Management Association and Lucknow Management Association.

Awareness through Media channels:

Investor awareness media activities form an integral part of MCX IPF. The objective is to spread mass awareness and educate commodity market stakeholders. During FY 2019-20, a number of investor awareness activities and knowledge series camps were carried out across India in partnership with organizations such as the Times Group, The Network 18 Group - TV18, CNBC Awaaz, CNBC Bajar, MoneyControl, Zee Business, Bloomberg Quint, Hindu Business Line, Financial Express, Business Standard, Mint, and Outlook magazine through digital, electronic and print modes. To boost the MCX IPF knowledge series camps that were conducted across India, the recorded episodes of the panel discussions were telecast on TV channels like ETNOW, CNBC Awaaz, CNBCTV18 and Zee Business. These were made available on the YouTube channel of the Exchange. The telecast promotional videos of the episodes were posted on social media a few days prior to airing.

The second volume of "A Monk Who Trades" cartoon series book was launched during this period and distributed to various stakeholders. In order to reach the masses at regional levels, this comic series was translated into Hindi and Gujarati and published in regional newspapers. Some of these comic strips were further developed into animated videos with voice overs. These videos were disseminated though digital modes on, Money Control, Bloomberg Quint, CNBCTV18. com and, and electronic modes such as ETNOW, TV18, CNBC Awaaz and Zee Business. Furthermore, the series was displayed on digital screens at Mumbai and Delhi airports for higher visibility.

MCX IPF in collaboration with ETNOW conducted the second edition of Comquest 2020, a national level commodity market educational quiz, which is the brainchild of MCX, in which 5,500 students from 176 academic institutions and universities from 22 Indian states and union territories participated. ETNOW hosted and carried out the quiz show. The recorded telecast of Comquest 2020 on ETNOW featured short interviews of the participants along with the entire quiz show consisting of different rounds of questions. In addition to this, live streaming of the show was carried out on social media for those who could not be present there.

MCX IPF uses various social media channels like YouTube, Twitter, Facebook, LinkedIn for mass awareness and education. INVESTOR SERVICE FUND (ISF)

Pursuant to SEBI circular dated June 13, 2017, your Company has set up an Investor Service Fund (ISF) for providing basic minimum facilities at various Investor Service Centres as mentioned in the said Circular. MCX has set up 10 Investor Service Centres across India till date. SEBI has permitted the exchanges to utilize the corpus of ISF for conducting various investor

education and awareness programs, capacity building programs and maintenance of all price ticker boards installed by the respective exchanges, cost of training of arbitrators, etc. In addition to above, the corpus may be utilized in other manner as prescribed/permitted by SEBI in the interest of investors from time to time.

In order to enhance literacy and to promote participation in the commodity derivatives market, over 180 awareness programs were conducted from ISF in FY 2019-20 to promote investor education and awareness. Out of these programs, over 70 programs were regional seminars conducted jointly with SEBI. These awareness programs were conducted in over 60 cities across India for target audience like general investors, students, hedgers, jewelers, other physical market participants from the bullion/ metal industries and also the agricultural sector including farmers, FPOs and corporates.

Your Company has transferred 1% of the turnover fees charged from its members on a monthly basis to ISF. As on March 31,2020, the corpus of ISF stood at Rs 578 lakh.

Considering the recent origin of ISF and its corpus being inadequate, SEBI has permitted utilization of interest on IPF, to pursue activities of ISF for a period of 3 years starting from April 01,2018.


MCX continues to inculcate among various stakeholders the knowledge about commodity derivatives and commodity trade, and share the knowledge about the positive aspects of using the derivatives exchange platform for price risk management and price discovery.

To achieve the said objectives, your Exchange during FY 2019-20:

i. Recorded 948 registrations for the MCX Certified Commodity Professionals (MCCP) examination;

ii. Conducted 8 MCCP training programmes in Mumbai;

iii. Hosted and trained 6 international and national delegations and 8 student and corporate delegations;

iv. Conducted over 168 Investor Protection Fund programmes across the country, of these over 60 programmes were for farmers;

v. Conducted 40 general awareness programmes on commodity derivatives at Business Schools in association with Hindu business line;

vi. Conducted 40 programmes on sensitizing stakeholders on Commodity Index Futures;

vii. Held 6 faculty development programmes for colleges and institutions;

viii. Conducted 2 capacity building programmes;

ix. As in the previous year, conducted 2 capacity building programmes for SEBI, under their Commodity Derivatives Trainers (CoTs) scheme to train commodity trainers.

Your Company continues its efforts to impart knowledge on commodity derivatives by conducting training programmes for various stakeholders in the ecosystem, such as traders, farmers, bankers, students, teachers, etc. During the year, eleven educational institutions have entered into MoUs with your Company, whereby these institutions will be introducing commodity derivatives as a subject in their syllabus. Further as part of the MoU, your Company will train the faculty of these institutions, who in turn will educate their students.

Your Company aims to increase the number of training sessions in the coming year for new participants such as from the banking and mutual fund segments.

During the year, internal training programmes on Information Security Management Systems ISO standard ISO/IEC 27001:2013 for MCX staff, as well as, induction programmes for new joiners were conducted.

Your Company has associated with Hindu Business Line to conduct commodity awareness programmes for MBA students at business school across the country.


To cater to the storage requirements of various members of the Exchange and their respective constituents/ depositors who are willing to store goods and give delivery on the Exchange platform, your Company had made necessary warehousing and logistics arrangements with Warehouse Service Providers (WSP)/ Vault Service Providers (VSP). Consequent to the transfer of clearing and settlement division of the Exchange to Multi Commodity Exchange Clearing Corporation Limited (MCXCCL) w.e.f. September 01,2018, physical deliveries of the commodities traded on the Exchange platform are effected through MCXCCL. Necessary warehousing arrangements with WSP/VSP have been made by MCXCCL for this purpose and which also undertakes accreditation of the warehouses/vaults, to ensure safe storage and preservation of quality of goods deposited by various business participants for delivery on its platform.

MCXCCL has a wide network and availability of warehouses for delivery of commodities traded on MCX platform. This provides confidence to members to trade on MCX. As at March 31,2020, MCXCCL has entered into agreements with seven WSPs for facilitating physical deliveries in agricultural commodities and Base Metals viz. Origo Commodities India Private Limited, Yamada Logistics Private Limited, Navjyoti Commodity Management Services Limited, Shree Shubham Logistics Limited, Steinweg Sharaf (India) Pvt. Ltd., Kalyx Warehousing Pvt Ltd and National Collateral Management Limited (NCML). As at March 31,2020, MCXCCL has accredited 46 warehouses of these seven WSPs, of which 40 warehouses are registered with the Warehousing Development & Regulatory Authority (WDRA). The remaining six warehouses for metals do not fall under jurisdiction of WDRA.

Further, MCXCCL entered into agreements with Sequel Logistics Private Limited, Brinks India Private Limited & Malca-Amit JK Logistics Pvt. Ltd. as Vault Service Providers for facilitating physical deliveries in bullion. There are 23 accredited vaults of these agencies located at Ahmedabad, Delhi, Mumbai, Bengaluru, Chennai, Cochin, Hyderabad, Jaipur, Rajkot, Agra, Salem and Kolkata.


Multi Commodity Exchange Clearing Corporation Limited (MCXCCL)

MCXCCL, a wholly-owned subsidiary of your Company, was set up as a separate clearing house to provide services such as clearing and settlement of trades and guaranteeing counter party risk. SEBI has granted renewal of recognition to MCXCCL for a period of three years commencing from July 31,2019 and ending on July 30, 2022, subject to complying with all rules, regulations, guidelines, and other instructions as may be issued by SEBI from time to time.

Risk management being an important function for a clearing corporation, MCXCCL has a well-defined Risk Management Framework in place. This works at various levels across the enterprise to form a strategic defence cover for the company. MCXCCL has constituted a Risk Management Committee, which periodically monitors and reviews risk management plan and the implementation of SEBI norms on risk management.

MCXCCL has received recognition from European Securities & Markets Authority (ESMA) as third country Central Counter Party (CCP) under European Market Infrastructure Regulation so that European participants can now apply lower risk weightage towards their exposures to MCXCCL. As commodity markets expand their outreach to the eligible Foreign Entities (EFEs) interested in hedging their commodity exposures in Indian commodity markets, this will make hedging by European importers cost efficient.

MCXCCL has also been granted Qualifying Central Counterparty (QCCP) status by SEBI, which enables the participants to apply lower risk weightage towards their exposures to MCXCCL as per Basel-II capital adequacy framework.

This is apart from membership of CCP12, the renowned global association of Central Counterparties and membership of Asia-Pacific Central Securities Depository Group (ACG).

During the year under review, the Authorized Share Capital of MCXCCL was increased from Rs 2,500 lakh to Rs 3,000 lakh. There was no change in the paid up capital of the company. As on March 31,2020, the paid-up capital of MCXCCL stood at Rs 23,999 lakh. The net worth of MCXCCL as at March 31,2020 stood at Rs 30,155.53 lakh.

Further, the Board of MCX has authorized MCXCCL to act as a Collecting Agent in terms of Rule 2(c) of Indian Stamp (Collection of Stamp Duty through Stock Exchanges, Clearing Corporations and Depositories) Rules, 2019 to collect the stamp duty under the said Rules. MCXCCL, being the Collecting Agent shall be responsible for ensuring compliances of the Indian Stamp Act, 1899 and the Rules made thereunder, as may be applicable, at all times.

Core Settlement Guarantee Fund (Core SGF):

SEBI vide circular no. SEBI/HO/CDMRD/DRMP/CIR/2018/111 dated July 11, 2018, issued norms related to computation of SGF requirement and standardized stress testing for credit risk in commodity derivatives. Accordingly, the total Core SGF as on March 31,2020 is Rs 40,977 lakh of which Rs 9,262 lakh has been contributed by MCX, Rs 25,361 lakh has been contributed by MCXCCL (including contribution on behalf of the members) and Rs 6,354 lakh has accrued from Penalties and Interests.

SEBI vide circular no. SEBI/HO/CDMRD/DRMP/CIR/P/2019/73 dated June 20, 2019, clarified that all penalties levied on short-collection/ non-collection of Margins as prescribed by SEBI Circular dated September 07,2016 shall be credited to Core SGF only. SEBI, further directed that penalties, if any, on short-collection/non-collection of margins for commodity derivatives segments levied by CCs/Exchanges be transferred to Core SGF, including penalties deposited in IPF Trust by Clearing Corporation (CC), ever since they started clearing functions for commodity derivatives segment. Accordingly, an amount of Rs 2,236 lakh has additionally been credited to Core SGF from MCX IPF.

SME Exchange of India Limited (SME)

SME, a subsidiary of your Company was set up to provide a platform for transacting, clearing and settlement of trades in small and medium enterprises segment.

The company had been under the process of members voluntary winding up and the requisite formalities for the same had been completed. The Official Liquidator had issued the final report vide letter dated March 05, 2019, filed before Honble High Court, Bombay, in respect of voluntary liquidation of SME. The Honble High Court, Bombay has passed order dated August 30, 2019 granting the prayer for treating SME as dissolved.


Your Company entered into an agreement with Central Depository Services Limited (CDSL) and CDSL Commodity Repository Ltd. (CCRL) effective May 18, 2018, for setting up and operationalization of the new repository under the Warehousing (Development and Regulation) Act, 2007. Pursuant to Section 2(6) of the Companies Act, 2013, CCRL became an associate company of MCX w.e.f. June 04, 2018, consequent to investment of Rs 1,200 lakh comprising of 12,000,000 equity shares of Rs 10 each, equivalent to 24% stake in CCRL.

During the year under review, there were no companies which have become or have ceased to be the joint venture of your Company. SME Exchange of India Limited has been voluntary liquidated vide Honble High Court, Bombay order dated August 30, 2019.

Further, the Managing Director & CEO of your Company does not receive any remuneration or commission from its subsidiary.

A report on the performance and financial position/salient features of the subsidiary and associate company as per the Companies Act, 2013 is provided as Annexure II.

In accordance with Section 136(1) of the Companies Act, 2013, the financial statements including consolidated financial statements and all other documents required to be attached thereto and audited annual accounts of MCXCCL, the subsidiary company, are available on our website under the weblink


Your Company has, in accordance with Section 129(3) of the Companies Act, 2013, prepared the annual consolidated financial statements, consolidating its financials with its wholly owned subsidiary company, MCXCCL and the associate company, CCRL. The annual audited consolidated financial statements have been prepared in accordance with the requirements of Ind AS prescribed under Section 133 of the Companies Act, 2013 read with relevant rules issued thereunder, as applicable, and other accounting principles generally accepted in India and forms part of this Annual Report.


Management Discussion and Analysis Statement, as stipulated under the SEBI Listing Regulations, 2015, forms a part of this Annual Report.


Your Company continues its journey of delivering value to all its stakeholders through investments in quality programs. Your Company has been enabling excellence in product and service delivery through compliance of robust processes, quality management system, customer centricity and risk mitigation. Your Company has adopted several external benchmarks and certifications to validate the processes and controls implemented across the Exchange.

While your Company, as a part of its continual improvements and sustainable quality and information security systems, certified for ISO 9001:2015 for Quality Management & ISO/IEC 27001:2013 certification for Information Security Management. As an attestation of our commitment to provide a seamless experience and ability of responding to and recovering from any type of disruption or disaster, your Company has been successfully certified for ISO 22301:2019 which is globally certified for Business Continuity Management System (BCMS). Your Company has deployed all required controls and plans for business continuity in a manner that they align with our strategic, regulatory and operational objectives. Your Company understands the criticality of the services it provides and have taken all proactive steps towards minimization of the risks associated with any eventuality.


Your Company regularly undertakes research activities for developing new products considering the evolving market needs, policy and regulatory landscape, risk management and global best practices. Based on such research and market perception, the Exchange launched futures contract in Kapas during the FY 2019-20.

Following the release of guidelines for Design of Commodity Indices and Product Design for Futures on Commodity Indices, your Company conducted extensive market survey and study of global best practices on creation and management of commodity indices. Based on the studies and feedback received, MCX iCOMDEX series of indices were launched on December 20, 2019. The live index values are being disseminated on a continuous basis through various modes. These

indices have a base value of 10,000 as on December 31,2015 and the historical index values since then are available on the MCX website. These indices are based on commodity futures contracts traded on MCX and conform to both the SEBI prescribed guidelines, as well as, the financial benchmarks set by the International Organization of Securities Commissions (IOSCO) in construction, administration and governance.

Your Company undertook various research studies during 2019-20. A study titled ‘Risk Management Concerns and Preferences of Participants in Base Metals Business was carried out by a team from IIM Ahmedabad to examine the economic benefits that accrue to small producers, users, traders, and consumers from the base metal derivative products traded in the commodity exchanges. The study found that futures contracts traded on MCX in five base metals have efficiency comparable to the leading international commodities exchanges. Majority of the base metal industry participants surveyed in the study were found to actively follow the base metal prices quoted in the futures markets. The study also suggested some policy measures and action by exchanges to help the base metal ecosystem participants in India to more effectively hedge their exposure to metal price risks.

During the year, your Company also undertook a study on existing public policy on agricultural price support mechanism and suggested a low-cost mechanism as an alternative to the policy. The alternative mechanism was subsequently presented to officials in the Ministry of Finance, Government of India.

Your Company engaged with a number of educational institutions and participated in research conferences conducted by the institutions such as IIM Ahmedabad, NISM, SEBI, etc. during FY 2019-20.

To spread awareness and promote research in commodity markets and its ecosystem, the ‘Commodity Insights Yearbook 2019 was released on India Commodity Day 2019. The publication aims at dissemination of comprehensive knowledge on the commodity market ecosystem, for the benefit of all stakeholders including market participants, financial institutions, policymakers, practitioners, analysts, producers, traders, consumers, industry observers, academicians, etc. As in 2018, the National Institute of Securities Management (NISM), an institution established by SEBI, was the partner organization in publication of the Commodity Insights Yearbook 2019 too.


The initiatives taken by your Company for growth and market development have been well appreciated and recognized at various fora. Your Company was honoured with the ‘Best Commodity Exchange Award at the India International Bullion Summit in March 2019. Your Company was also awarded as the ‘Best Exchange For Bullion, Metals and Energy by the Commodity Participants Association of India (CPAI) in July 2019. Further, your Company was recognised as the ‘Best Commodity Exchange at the India International Gold Convention in August 2019.


Given the nature of its operations, your Company has a very low impact on the environment. Notwithstanding, your Company is committed to minimizing its environmental impacts through efficient use of natural resources, including electricity, which is the key touch point of the Exchanges technology driven business. Your Company is governed by an effective Environmental Policy. Your Company believes that in order to meet the objectives of its Environmental Policy, employee commitment is imperative. Your Company constantly endeavors to create awareness amongst employees and encourages them to adopt conservation practices on an ongoing basis. Your Company successfully completed ISO 14001:2015 surveillance audit without any observation, and continues to monitor its Environment Management Plan, developed on the basis of the Environment Review conducted annually, to assess the impact of the Companys activities. Your Company has also developed an E-Waste Policy for the safe disposal of e-waste from its premises and has tie-ups with authorized e-waste recyclers to dispose the e-waste in an eco-friendly manner. Further, the e-waste disposal is minimized by adopting best practices in maintenance and re-use of resources. Other initiatives implemented by your Company to save the environment are smoke emission test, noise pollution test, water test, cold fogging and password enabled printer to minimize wastage of paper.


Embedded in the vision and mission of your Company, CSR has always been considered as an opportunity to serve the nation and to bring a perceptible change in the lives of the people. Focused on the community priorities, your Company regularly aligns its strategy, by constantly expanding the CSR outreach, for the inclusive growth and development of the society.

Out of the total CSR budget of Rs 602.24 lakh, CSR projects amounting to Rs 490.49 lakh have been approved during the year, out of which Rs 333.18 lakh has been utilized as on March 31,2020. This includes our contribution of Rs 2 crores to the Prime Ministers Citizen Assistance and Relief in Emergency Situations Fund (PM CARES) to assist the governments efforts in containment and relief against the COVID-19 pandemic. It may be noted that implementation of some of the approved projects was impaired due to COVID-19 lock down and restrictions imposed.

In FY 2019-20, the interventions include providing equipment to facilitate quality healthcare, supporting rural development through Integrated Watershed Management Scheme, empowering women and differently abled, enhancing education to visually challenged, encouraging higher education and pursuing nursing courses for economically weaker girl students, etc.

In continuation to our efforts against COVID-19, during FY 2020-21, your Company has also donated Personal Protective Equipment and N-95 respiratory masks to government/municipal hospitals.

The interventions during the year epitomize the conviction of your Company to serve and empower the needy communities and to contribute towards the development of the nation. Going forward, your Company aims to further strengthen its initiatives and continue to serve the society at large.

The brief of the CSR activities undertaken during the year have been provided in the Annual Report on CSR activities forming part of this Report as Annexure III.

The CSR Policy formulated in accordance with the Companies Act, 2013 (as amended from time to time), guides the Companys CSR approach to sub serve the well-being of the society at large. The CSR Policy and initiatives adopted by the Company on CSR during FY 2019-20 are available at the web link


Pursuant to Regulation 34 of the SEBI Listing Regulations, 2015 and amendment thereof, the Annual Report of top 1000 listed entities, based on market capitalization, shall include the Business Responsibility Report (BRR) describing the initiatives taken by Company from an environmental, social and governance perspective. In compliance with the same, BRR forms part of this Annual Report.

Further, your Company has evolved a Business Responsibility Policy, encompassing the broad scope of the initiatives, to be undertaken by the Company, to best sub serve the interest of all the stakeholders.


Your Company adheres to ethical standards to ensure integrity, transparency, independence and accountability in dealing with all stakeholders. Accordingly, your Company has adopted various codes and policies to carry out the duties in an ethical manner. Some of these codes / policies framed and implemented by your Company are the Code of Conduct and Code of Ethics, Code of Conduct for Prevention of Insider Trading, Code of Practices and Procedures for Fair Disclosures of Unpublished Price Sensitive Information, Whistle Blower Policy /Vigil Mechanism, Policy on Related Party Transactions, Policy for determining Material Subsidiaries, Corporate Social Responsibility Policy, Risk Management Policy, Nomination and Remuneration Policy, Policy for Appointment of Independent External Persons on Committees of the Board, Board Diversity Policy, etc.


Pursuant to Section 92(3) of the Companies Act, 2013 read with Rule 12(1) of the Companies (Management & Administration) Rules, 2014, the extract of Annual Return for FY 2019-20 is attached as Annexure IV to this Report. The same is also available at the weblink


Eight meetings of the Board of Directors were held during FY 2019-20. For further details, please refer to the report on Corporate Governance forming part of this Annual Report.


Your Company believes in the conduct of the affairs of its constituents in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethical behaviour. Pursuant to Section 177(9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 and Regulation 22 of the SEBI Listing Regulations, 2015, the Board of Directors have implemented a vigil mechanism through the adoption of Whistle Blower Policy which has been amended from time to time. For further details, please refer report on Corporate Governance forming part of this Annual Report.


Your Company has formulated the Policy on Materiality of Related Party Transactions and Dealing with Related Party Transactions which has been amended from time to time. The latest Policy is uploaded on the website of your Company and may be accessed at the web link:

All related party transactions entered into by your Company during the period under review are in the ordinary course of business and at arms length pricing basis. Also, prior omnibus approval is obtained for related party transactions which are of repetitive nature and entered in ordinary course of business and are at arms length. All the related party transactions entered into by your Company during the year under review, were placed and approved by the Audit Committee and/or by the Board, as applicable, in accordance with the Companies Act, 2013, SEBI Listing Regulations, 2015 and other applicable guidelines/directions from Regulator, if any. Transactions with MCXCCL, being a wholly owned subsidiary of the Company, does not trigger the compliances relating to a related party transaction. However, the Company, as a good corporate governance practice, is complying with such provisions w.r.t. the transactions entered with MCXCCL.

Pursuant to Section 134(3) (h) read with Rule 8(2) of the Companies (Accounts) Rules, 2014, the particulars of material contracts or arrangements with related parties to be reported under Section 188 (1) of the Companies Act, 2013 is appended in Form AOC - 2 as Annexure V to this Report.

All Related Party Transactions as required under Ind AS 24 - Related Party Disclosures are reported in Note 39 and Note 38 of Notes to Accounts of the standalone and consolidated financial statements of your Company, respectively.


Your Company, being a recognized stock exchange and regulated by SEBI, is required to, inter alia, comply with provisions relating to the constitution of the Companys Board of Directors as specified in Companies Act, 2013, the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018. (SECC Regulations, 2018) and SEBI Listing Regulations, 2015.

Your Company has a well-diversified Board comprising of Directors coming from various walks of life and having broad range of experience, in the areas of law, finance, accounting, economics, governance, management, administration, etc. This facilitates the Board to have the benefit arising out of a multi-faceted talent-pool to leverage differences in thought, perspective, knowledge, skill, regional and industry experiences to ensure effective corporate governance and sustained commercial success of the Company.

As on March 31, 2020, the Board comprised of 12 (twelve) Directors, of which 6 (six) were Public Interest Directors( PID), 5 (five) were Shareholder Directors and 1 (one) Managing Director. Your Company had 4 (four) Women Directors on the Board, including 2 (two) Independent Woman Directors, as stipulated under SEBI Listing Regulations, 2015.

A "Public Interest Director" under the SECC Regulations, 2018, means an Independent Director representing the interests of investors in securities market and who is not having any association, directly or indirectly, which in the opinion of the Board, is in conflict with his role, and accordingly such directors are considered as Independent Directors for adhering compliance with the provisions under the SEBI Listing Regulations, 2015 and the Companies Act, 2013.

As mandated, all the Public Interest Directors of your Company have been duly registered with the databank for Independent Directors maintained by the Indian Institute of Corporate Affairs.

Your Company has received confirmations from the respective Public Interest Directors to the effect that each of them meets the criteria of independence, as prescribed under Regulation (16)(b) of the SEBI Listing Regulations, 2015 and Section 149(6) of the Companies Act, 2013. There has been no change in the circumstances affecting their status as Independent Directors of the Company. The nomination/ appointment of Independent Directors/ Public Interest Directors on the Board of your Company is in accordance with the eligibility conditions prescribed by SEBI and with the approval of SEBI.

Further, all the Directors have confirmed that they are Fit and Proper, in terms of the SECC Regulations, 2018. Your Company has also obtained affirmation of adherence to Schedule IV of the Companies Act, 2013 and the Code of Conduct of your Company in accordance with the SEBI Listing Regulations, 2015 from all the Directors as applicable.

In view of the completion of tenure of Mr. Mrugank Paranjape (DIN: 02162026) as MD & CEO of the Company on May 08, 2019, the Nomination and Remuneration Committee initiated the process for appointment of MD & CEO as laid down in SECC Regulations, 2018. The said Committee recommended the names of two candidates to the Board for its consideration and onward submission to SEBI. The Board, after deliberations, accorded its approval for recommendation to SEBI, the name of Mr. Padala Subbi Reddy (P.S. Reddy) (DIN: 01064530) as an Additional Director and MD & CEO for a period of five years, subject to such other approvals as may be necessary.

Mr. Mrugank Paranjape ceased to be MD & CEO of the Company and a KMP, on expiry of his tenure w.e.f. close of business hours on May, 08 2019.

Mr. P.S. Reddy was appointed as MD & CEO of the Company for a period of five years w.e.f. May 10, 2019, with prior approval of SEBI. He was also designated as a whole-time Key Managerial Personnel in terms of Section 203 of the Companies Act, 2013, w.e.f. May 10, 2019. The said appointment was also approved by the shareholders at the 17th Annual General Meeting (AGM) of the Company held on September 20, 2019.

In view of the expiry of tenure of Mr. Saurabh Chandra (DIN:02726077) as a PID and Chairman of the Exchange on July 02, 2019, the Board, in compliance with the provisions relating to appointment and performance review of a PID prescribed under the SECC Regulations, 2018 and SEBI circular no. SEBI/HO/MRD/DOP2DSA2/CIR/P/2019/26 dated February 5, 2019, recommended to SEBI, the extension of tenure of Mr. Saurabh Chandra as a PID on the Board of the Exchange by another term of three years. SEBI vide letter dated May 31, 2019, approved the re-appointment of Mr. Saurabh Chandra as a PID on the Board of the Exchange. Details relating to performance evaluation of Mr. Saurabh Chandra for recommending his extension is covered in the section relating to Performance Evaluation of the Board. Further, the Board recommended to SEBI to accord its approval for Mr. Saurabh Chandra being the Chairman of the Governing Board in terms of the SECC Regulations, 2018. SEBI vide letter dated July 25, 2019, approved the appointment of Mr. Saurabh Chandra as the Chairman of the Board.

Your Exchange had recommended names to SEBI seeking its approval for filling the vacancy caused due to resignation of Mr. Arun Bhargava (DIN: 02375147) as a PID from the Board of the Exchange w.e.f. March 06, 2019. SEBI vide letter dated May 31,2019, approved the appointment of Dr. Gulshan Rai as PID on the Board of the Exchange for a period of three years for filling up the said vacancy. Dr. Rai was to be formally inducted as PID on the Board of the Exchange on receipt of "No Objection" from Government of India. However, later he expressed his inability to join the Board owing conflict of interest in terms of SECC Regulations, 2018, on being co-opted as a director on the board of subsidiary of a stock exchange.

Consequently, your Exchange further recommended names to SEBI for its approval to fill the vacancy arising due to inability of Dr. Gulshan Rai to join as PID on the Board of the Exchange, as well as, the imminent vacancy arising out in view of completion of tenure of Mr. Prithvi Haldea (DIN:00001220) on October 24, 2019. The Board had recommended to SEBI for appointing Ms. Pravin Tripathi (DIN: 06913463) as a PID on the Board of the Company considering her diverse and versatile professional experience of financial and accounting functions. It had also recommended the appointment of Dr. Bhartendu Kumar Gairola (DIN: 02442205) as a PID on the Board of the Company considering his domain knowledge and experiences in the field of technology.

Mr. Prithvi Haldea resigned as a PID w.e.f. September 03, 2019 before completion of his tenure due to his other heavy commitments.

Ms. Pravin Tripathi (DIN: 06913463) and Dr. Bhartendu Kumar Gairola (DIN: 02442205) were appointed as PIDs on the Board of the Exchange w.e.f. September 17, 2019 to fill the vacancy of Mr. Prithvi Haldea and Dr. Gulshan Rai with the approval of SEBI.

The Board is of the opinion that both Ms. Pravin Tripathi and Dr. Bhartendu Kumar Gairola possess the requisite qualification, experience, expertise and hold high standards of integrity.

Mr. Chengalath Jayaram (DIN: 00012214) and Ms. Padma Raghunathan (DIN: 07248423), Shareholder Directors,, who were liable to retire by rotation at the 17th AGM of the Company held on September 20, 2019, were re-appointed with the approval of the shareholders and SEBI w.e.f. September 20, 2019.

In accordance with the provisions of the Companies Act, 2013, Mr. Amit Goela (DIN: 01754804) and Ms. Madhu Vadera Jayakumar (DIN: 00016921), Shareholder Directors, who have been longest in office since their appointment, are liable to retire by rotation at the ensuing AGM and being eligible, are seeking re-appointment. The Board recommends their reappointment.


The following employees became KMPs under SECC Regulations, 2018 during FY 2019-20:

Name Effective Date
1 Mr. Radheshyam Yadav, Vice President - Technology April 01,2019
2 Mr. Pravin Gade, Vice President - Technology April 01,2019
3 Mr. Satyajeet Bolar, Vice President - Finance & Accounts April 09, 2019
4 Mr. Sanjay Golecha, Chief Regulatory Officer September 18, 2019

Further, considering the change in the top management due to completion of tenure of Mr. Mrugank Paranjape as MD & CEO of the Company on May 08, 2019 and to ensure smooth transition in the business and operations of the Company, Mr. P.S. Reddy was appointed as Officer on Special Duty and identified as a KMP under SECC Regulations, 2018 w.e.f. April 26, 2019, until he assumed office as MD & CEO of the Company i.e. May 10, 2019.

Consequent to the resignation, the following employees ceased to be KMPs under SECC Regulations, 2018 during FY 2019-20:

Name Last working day
1 Mr. Girish Dev - Chief Regulatory Officer September 17, 2019
2 Mr. Deepak Mehta, Head Energy & Agri, Product Management January 10, 2020
3 Mr. Jayaprakash Menon, Vice President - Business Development February 06, 2020
4 Dr. Venkatachalam Shunmugam, Head - Research and Index Administration March 31,2020

Further, Mr. Rajendra Gogate ceased to be Head- HR and Admin and a KMP under SECC Regulations, 2018 on attaining the age of superannuation, w.e.f. March 01,2020.

Also, Mr. Sanjay Wadhwa resigned as the Chief Financial Officer (CFO) of the Company and a KMP under the Companies Act, 2013 and his last working day was December 06, 2019. Mr. Satyajeet Bolar, VP-Finance & Accounts, had been given an interim charge of the finance function. The update on the same, post March 31,2020, is covered separately in this Report.


Your Company has a Policy on Performance Evaluation formulated in accordance with the provisions of the Companies Act, 2013, SEBI Listing Regulations, 2015, SECC Regulations 2018, SEBI Circular dated January 05, 2017 which provides further clarity on the process of Board Evaluation ("SEBI Guidance Note") and SEBI circular dated February 05, 2019.

The Policy has been framed with an objective to ensure individual directors of the Company and the Board as a whole, work efficiently and effectively in achieving their functions, for the benefit of the Company and its stakeholders.

Your Company has implemented a system of evaluating performance of the Board of Directors and of its Committees and individual Directors on the basis of a structured questionnaire which comprises evaluation criteria as listed hereunder, through peer evaluation, excluding the Director being evaluated.

The criteria for performance evaluation, inter-alia, includes the following:

i. Internal Evaluation of Individual Directors Performance

The individual Directors performance is evaluated based on his/ her level of participation and contribution to the performance of Board/ Committee(s) meetings, qualification & experience, knowledge and competency, fulfillment and ability to function as a team, initiatives taken, adherence to the rules/regulations, having independent views and judgement, providing guidance to senior management and Board members, etc.

ii. External Evaluation of Individual Directors Performance

Pursuant to SECC Regulations, 2018 read with SEBI circular dated February 05, 2019, the tenure of PIDs may be extended by another 3 years, subject to performance evaluation, internal and external, both carrying equal weightage. Such PIDs shall be subject to:

a. Internal evaluation by all the governing board members, based on the criteria for the performance review of individual director; and

b. External evaluation by a management or a human resources consulting firm based on their pre-determined criteria.

iii. Evaluation of the Board as a Whole

Providing entrepreneurial leadership to the Company, having clear understanding of the Companys core business and strategic direction, maintaining contact with management and external stakeholders, ensuring integrity of financial controls and systems of risk management, making high quality decisions, monitoring performance of management, maintaining high standards of integrity and probity, encouraging transparency, etc.

iv. Chairmans Performance Evaluation

Providing effective leadership, setting effective strategic agenda of the Board, encouraging active engagement by the Board members, providing guidance and motivation to MD & CEO, impartiality in conducting discussions, establishing effective communication with all stakeholders, etc.

v. Performance Evaluation of Board Committees

Sufficiency in the scope for addressing the objectives, effectiveness in performing the key responsibilities, adequacy in composition and frequency of meetings, quality of relationship of the Committee with the Board and the management, clarity of agenda discussed, discussion on critical issues, clarity of role and responsibilities, etc.


The composition of Audit Committee is covered under the Corporate Governance Report. During the year under review, there were no instances, where the Board had not accepted any recommendation of the Audit Committee.


M/s Shah Gupta & Co., (Firm Registration No. 109574W) Chartered Accountants were appointed as Statutory Auditors of the Company under casual vacancy for FY 2014-15. Subsequently, they were appointed as Statutory Auditors by the shareholders, at the 13th Annual General Meeting (AGM) held on September 29, 2015 for a period of five years, subject to ratification by the shareholders at every AGM. Thereafter, in terms of the amendment in the provisions of the Companies Act, 2013, the shareholders at the 16th AGM of the Company held on September 20, 2019 approved that the said appointment would not be subject to ratification at every subsequent AGM.

The Board recommends re-appointment of M/s. Shah Gupta & Co., Chartered Accountants as the Statutory Auditors for a second term in accordance with the provisions of Companies Act, 2013. Your Company has received the consent from the Auditors and necessary certificate of their eligibility pursuant to Section 139(1) of the Companies Act, 2013 and Rules made thereunder.

The Report given by the Auditor on financial statements of the Company forms part of the Annual Report. There is no qualification, reservation or adverse remark made by the Auditor in their report.


M/s Naithani & Associates, Practicing Company Secretaries, were appointed as the Secretarial Auditors by the Board to conduct the secretarial audit for the Company for financial year 2019-20.

In accordance with Section 204(1) of the Companies Act, 2013, the Secretarial Audit Report for the financial year ended March 31,2020 is annexed as Annexure VI to this Report.

The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

The Secretarial Auditor in their report have stated that the composition of the Board of Directors specified under Regulation 23 of SECC Regulations, 2018, had been affected due to resignations of Public Interest Directors w.e.f. March 6, 2019 and September 03, 2019 respectively. The Company had initiated the process of filling up vacancies of Public Interest Directors and the said appointments were done on September, 17, 2019.

Management Response:

Mr. Arun Bhargava resigned as PID from the Board of the Exchange w.e.f. March 06, 2019. SEBI on being informed of the same advised the Company to comply with the provisions of the Companies Act, 2013 and SEBI regulations in this regard. Accordingly, the Company recommended candidates to SEBI for its approval, for filling the vacancy arising out of the resignation of Mr. Bhargava. SEBI vide letter dated May 31,2019, approved the appointment of Dr. Gulshan Rai as PID on the Board of the Exchange for a period of three years for filling up the said vacancy. However, Dr. Rai could not join the Board owing conflict of interest in terms of SECC Regulations, 2018.

Thereafter, the Company further recommended names to SEBI to fill the vacancy arising due to inability of Dr. Gulshan Rai to join as PID on the Board of the Exchange, as well as, the imminent vacancy arising out of completion of tenure of Mr. Prithvi Haldea. Subsequently, Mr. Prithvi Haldea resigned as PID effective September 03, 2019 before completion of his tenure. The said vacancies were thereafter filled in terms of SEBI approval letter dated September 17, 2019.


Your Company has maintained adequate internal financial controls over financial reporting, which are constantly assessed and strengthened with new/revised standard operating procedures. The Board has adopted policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Companys policies, safeguarding of its assets, prevention and detection of fraud, error reporting mechanisms, accuracy and completeness of the accounting records and timely preparation of reliable financial disclosures.

The Companys internal control system is commensurate with its size, scale and complexities of its operations. The Audit Committee of the Board actively reviews the adequacy and effectiveness of the internal control systems and suggests improvements to strengthen the same. The Audit Committee of the Board and Statutory Auditors are periodically apprised of the internal audit findings and corrective actions taken. Audit plays a key role in providing assurance to the Board of Directors on the effectiveness of internal controls and the veracity of the financial statement. Such internal financial controls over financial reporting were operating effectively as of March 31,2020.


No fraud has been reported by the Auditors to the Audit Committee or the Board.


No significant and material orders were passed, during the year under review, by the regulators or courts or tribunals impacting the going concern status and Companys operations in future.


Human Resource (HR) plays an instrumental role in ensuring the success of the organization. In doing so, HR works in partnership to create an environment whereby they can thrive and are able to deliver a sustainable performance in the best interest of the organisation.

HR principles & priorities ensures that the Exchange retains, develops and continues to attract people with the requisite skills to help shape a better organization and foster employee engagement and motivation throughout the implementation process. To ensure that the employees have avenues and opportunities to raise their concerns, share their suggestions and give their opinions, departmental meeting with MD & CEO across all level were organised. These meetings have a blend of formal, as well as, an informal setting which helps in promoting communication, the exchange of views and ideas during the year.

Additionally, Exchange undertakes various staff welfare activities to improve productivity by bringing unity such as the "Annual Employee Event", which are designed to enhance interpersonal relationship and team work. As a new initiative, Exchange has rewarded employees children for their exceptional efforts in passing 10th and 12th standard examination with flying colors.

In order to assess employees potential to manage next level responsibilities and setting the right work culture across the organization, HR initiated Assessment Centre in the organization through a third party agency. To begin with, the senior team at AVP & above level employees were subjected to assessments.


Your Company continues to have in place an Anti-Sexual Harassment Policy and is compiled with the provision relating to the constitution of Internal Complaints Committee under "The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013"

No complaints were received during the year 2019-20 in relation thereto. During the year under review, your Company has also imparted awareness training to all employees including outsourced manpower on the Anti-Sexual Harassment Policy.


The stock options granted to the employees of the Company, operate under the "Employee Stock Option Scheme 2008 (ESOP 2008)" of MCX, formulated in accordance with the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines 1999, which was approved by the shareholders at the Extraordinary General Meeting held on February 27, 2008. MCX ESOP Trust constituted by the Company is responsible for administration and implementation of the scheme under the directions of the Nomination and Remuneration Committee of the Board of Directors of MCX. The said Scheme is being implemented in compliance with the provisions of the SEBI (Share Based Employee Benefits) Regulations, 2014 [SBEB Regulations] and there has been no change in the Scheme during the year ended March 31,2020.

During the year, the Nomination and Remuneration Committee authorised the exercise of options equivalent to 34,888 equity shares of Rs 10/- each by the eligible employees, which were granted under the aforesaid Scheme. Accordingly, the MCX ESOP Trust transferred 34,888 equity shares of the Company of Rs 10/- each to the respective eligible employees.

The relevant disclosures required under the SEBI Regulations for the year ended March 31, 2020 are available on the website of the Company at


Your Company has adopted a well-defined Nomination & Remuneration Policy for Directors, Key Managerial Personnel and other employees formulated in terms of the provisions of SECC Regulations, 2018, Companies Act, 2013 and SEBI Listing Regulations, 2015. The said Policy forms part of this Report as Annexure VII, and is also available under the weblink

The ratio of the remuneration of each Director and KMP to the median employees remuneration and other details in accordance with Section 197 (12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Regulation 27(6) of the SECC Regulations, 2018, forms part of this Report as Annexure VIII.

Further, in accordance with Section 197 (12) of the Companies Act, 2013 read with Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, and Regulation 27(5) of SECC Regulations, 2018, a statement containing particulars of employees as stipulated therein also forms part of this Report as Annexure IX.


The disclosures to be made under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014, are explained as under:


Your Companys operations are not energy intensive, however it undertook various measures to reduce energy consumption by using energy-efficient computer systems and equipment. As an ongoing process, your Company evaluates new technologies and techniques to make its infrastructure more energy efficient.

(i) Steps taken or impact on Conservation of Energy:

Your Company has in-row cooling system for servers in the Data Center that cools only the equipment and not the external environment, thereby, ensuring that no energy is wasted in running compressors excessively, to maintain the desired temperature levels of external environment.

The Company regularly replaces high energy consuming electrical equipment with modern efficient devices such as replacing the fluorescent lights with LED light and the CCTV surveillance system from Analog cameras to IP cameras. Your Company has UV resistant film on facade glass windows to reduce the heat entering the building which reduces the air-conditioning load. The glass windows also reduces the electricity consumption due to lesser need of lighting during the day.

Your Company has installed Motion/Occupancy Sensors in low footfall area for controlling lights and reduce energy consumption.

Your Company maintains adequate capacitor bank for non-linear electrical loads like air-conditioning plant, pumps and Heat Recovery System, thereby reducing the drawing of extra energy and improving the power factor. Also, energy audit, heat load calculations and power factor corrections are carried out on annual basis.

(ii) Steps taken by your Company for utilising alternate sources of energy:

No alternate source of energy is utilized by your Company.

(iii) Capital investment on energy conservation equipment:

No capital investment on energy conservations equipment during the year under review.


(i) The efforts made towards technology absorption:

Implementation of hyper converged Infrastructure

Your Company has enhanced the hardware virtualization footprint and continued to move majority of its application to hyper converged infrastructure, thus ensuring high availability and better disaster recovery capability. Energy efficient hardware have been installed thus enabling the Exchange to reduce the overall carbon footprint to meet the global standard for Environmental management system for which your Company is certified for ISO 14001.

Cyber Security framework

Special emphasis has been laid by your Company on continuous improvement in its cyber security framework and information security management systems. There is an ongoing process to strengthen cyber security to be in line with the guidelines laid down by the market Regulator and other national agencies to provide increased resilience and rapid response to cyber threats to its IT infrastructure. In addition to implementation of Security Operation Centre (SOC) for monitoring cyber-attacks / incident related alerts round the clock, your Company has also implemented Privilege Access Management (PAM) tool to monitor and manage the access control of the critical assets. Your Company has fully implemented two factor authentication (2FA) for web based systems for enhanced security.

Increase in accessibility via wed based application

Your Company has continued to increase and enhance features on the web based application to improve on user experience for seamless exchange of information for its members and clients. In addition to this, it has increased security access by introducing two factor authentication to prevent any unauthorized access to the applications.

Automation of switchover/switchback between Primary & DR site

Your Company has deployed automated and well defined processes to the extent possible. This has reduced the switch-over from Primary site to Disaster Recovery Site, with reduced Recovery Time Objective (RTO) and Recovery Point Objective (RPO). Your Company, in compliance with regulatory norms, has conducted smooth and successful 2 day unannounced live trading twice in FY 2019-20.

Upgradation of information technology systems

Your Company has regularly allocated substantial resources towards upgrading information technology systems, with an over-arching goal of achieving higher capacity and lower latency, improving market efficiency and transparency, enhancing user access and providing flexibility for future business growth and market needs.

(ii) The benefits derived like product improvement, cost reduction, product development or import substitution

During FY 2019-20, your Company has continued to invest in IT systems and using it as an enabler to provide a competitive advantage. Your Companys robust technology infrastructure continues to provide uninterrupted trading experience, reliability, credibility and mitigating risk of single point of failure.

Your Company has implemented industry proven technology solutions after due validation and verification. This has enabled the Company to offer quality services which meet business needs. Your Company has used indigenous technologies in security space, thereby, substantially reducing expensive import costs.

Your Company has an in-house software development team which undertook several initiatives in FY 2019-20 to enhance, develop and roll out various ancillary and peripheral systems as required by the organisation. In certain areas the team has developed in-house solutions to replace existing vendor applications, thereby removing vendor dependency and increasing flexibility to implement requirements as per business expectation and timelines. With a right mix of in-house and outsourced resources, your Company is adopting new technologies to deliver the growing business needs and ensuring quality services for the clients.

(iii) In case of imported technology (imported during the last three years reckoned from the beginning of the financial year)

Your Company has not directly imported any technology during the last three financial years.

(iv) Your Company has incurred Rs 37.15 lakh on Research and Development during the year under review.


The details of foreign exchange earnings and outgo during the year under review forms part of the Significant Accounting Policies and Note no. 36 and 35 of Notes to Accounts of the standalone and consolidated financial statements.


Your Company continues to be committed to good corporate governance aligned with the best corporate practices. The report on Corporate Governance, as stipulated under Regulation 34(3) read with Schedule V of the SEBI Listing Regulations, 2015 and the certificate from a Practicing Company Secretary, regarding compliance of conditions of corporate governance, forms part of this Annual Report. The report on Corporate Governance also contains certain disclosures required under the Companies Act, 2013.

Disclosure pertaining to resources committed towards strengthening regulatory functions and ensuring compliance with regulatory requirements, backed by an activity based accounting, in terms of Regulation 33 of the SECC Regulations, 2018, is as under.

The Company has dedicated resources to manage the regulatory functions i.e. Membership compliance, Inspection, Surveillance, Investigation, Regulatory compliance etc. There are 113 resources in these functions in various designations. Each of such department is headed by a senior official of the Company, reporting to the Chief Regulatory Officer, who in turns reports to MD & CEO. The total cost incurred by the Exchange towards these functions in FY 2019-20 was Rs 1,360 lakh.

Department Head count
Inspection & Audit 21
Membership 18
Investor Services Department 22
Regulatory Compliance 3
Legal Compliances 3
Surveillance & Investigation 22
Market Operations 18
Regulatory 2


Director/KMP update

i. Mr. Satyajeet Bolar has been appointed as the Chief Financial Officer of the Company and a KMP under the Companies Act, 2013 w.e.f. May 30, 2020.

ii. In view of the expiry of tenure of Mr. Shankar Aggarwal (DIN: 02116442) as a PID on the Board of the Exchange on September 30, 2020, the Board, in compliance with the provisions relating to appointment and performance review of a PID prescribed under the SECC Regulations, 2018 and SEBI circular no. SEBI/HO/MRD/DOP2DSA2/CIR/P/2019/26 dated February 5, 2019, recommended to SEBI, the extension of tenure of Mr. Aggarwal as a PID on the Board of the Exchange by another term of three years. SEBI vide letter dated June 24, 2020, approved the re-appointment of Mr. Aggarwal as a PID on the Board of the Exchange. Details relating to performance evaluation of Mr. Aggarwal for recommending his extension is covered in the section relating to Performance Evaluation of the Board.

Regulatory update

i. In view of the COVID-19 pandemic, SEBI had issued circular with regard to relaxations in timelines for compliance with regulatory requirements by trading members / clearing members and also relaxation in time period for certain activities carried out by Stock brokers.

ii. Based on discussions with various market participants and their feedback and with a view to allow ease of doing business in the securities market, SEBI has decided to make use of technological innovations which can facilitate online KYC and issued circular in this regard.

Product update

i. The global economic and industry slowdown/ shutdown on account of COVID-19 resulted in unprecedented price movements in energy markets. With the collapse in demand owing to the coronavirus outbreak, the OPEC+ production cut was not substantial enough to prevent a further drop in oil price. Further with the enormous supply glut and global oil storage, NYMEXs WTI Crude Oil was worst hit and the prices swirled down to negative terrain (-$37.63/bbl on April 20, 2020), for the first time in recorded history.

The Exchange undertook further risk management measures due to such increased volatility by introducing additional and slab based margins. Further, the Exchange has also initiated system development efforts for providing negative price trading feature in the system. Meanwhile, as an interim measure, additional auction window mechanism has also been introduced for the market participants.

MCX has received several complaints from clients and members on account of negative settlement of the April, 2020 Crude Oil contract, and few members / client have resorted to legal recourse and filed writ petitions with Honble High Court (s) in different cities. No relief has been granted so far by any High Court to the petitioners. The Exchange is defending itself in the court of law.

ii. Despite lockdown, the Exchange experienced a very smooth settlement process for all its base metals contracts. Due to the unavailability of spot prices, MCX successfully extrapolated the spot prices and settled its metals contract without any snags.

With the physical markets not functioning due to lockdown, and low offtake of metal in the markets, MCX turned out to be a platform of choice for the trade to deliver metals. Almost 4186 MTs of metal was delivered in April, 2020 and 8946 mTs got delivered in May, 2020.

iii. As per SEBI directives, Silver Mini (5 Kg) contracts has been converted from "Both Option" to "Compulsory Delivery" from June 2020 contract onwards. Further, alignment of trading unit and delivery unit was implemented from June, 2020 contract onwards, with both set at 5 kgs respectively. Earlier trading unit and delivery unit were at 5 kgs and 30 kgs respectively.


Pursuant to the requirement of Section 134 of the Companies Act, 2013, your Directors confirm that:

a) in the preparation of the annual accounts for the year ended March 31,2020, the applicable accounting standards have been followed and there are no material departures from the same;

b) they have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31,2020 and of the profit of the Company for the year ended on that date;

c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) they have prepared the annual accounts on a going concern basis;

e) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.


The Board of Directors wish to place on record their sincere gratitude for the valuable guidance and continued support extended by the Securities and Exchange Board of India, Reserve Bank of India, Stock Exchanges, Ministry of Corporate

Affairs, other government authorities, Banks and other stakeholders. Your Directors would also like to take this opportunity to express their appreciation for the dedicated efforts of the employees of the Company.

For and on behalf of the Board of Directors

Saurabh Chandra
New Delhi
July 25, 2020