Multi Commodity Exchange of India Limited (NSE: MCX) Q2 2025 Earnings Call dated Oct. 21, 2024
Corporate Participants:
Manoj Jain — Chief Operating Officer
Rishi Nathany — Chief Business Officer
Chandresh Shah — Chief Financial Officer
Praveen D.G. — Chief Risk Officer
Analysts:
Amit Chandra — Analyst
Prayesh Jain — Analyst
Parikshit Gupta — Analyst
Mohit Motwani — Analyst
Chintan Sheth — Analyst
Sanketh Godha — Analyst
Devesh Agarwal — Analyst
Heenal Gada — Analyst
Subramanian Iyer — Analyst
Arpit Shah — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Multi Commodity Exchange of India Limited Q2 FY ’25 Earnings Conference Call. Joining us on the call are Mr. Manoj Jain, Chief Operating Officer, MCX; Mr. Chandresh Shah, Chief Financial Officer, MCX; Mr. Praveen DG, Chief Risk Officer, MCX; and Mr. Rishi Nathany, Chief Business Officer, MCX. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr Manoj Jain, Chief Operating Officer, MCX. Thank you, and over to you, sir.
Manoj Jain — Chief Operating Officer
Thank you, Del. Good evening to all of you and a very warm welcome to the Earnings and Analyst
Call of Multi Commodity Exchange of India Limited for Q2 FY ’25. We are glad that MCX has concluded yet another quarter on a significant positive note. The company’s PAT in Q2 sequentially grew to INR153.62 crores as against INR110.92 crore, which is an increase of 39% sequentially. The operational revenue for this quarter has increased by 73% to INR285.58 crores compared to the corresponding quarter of the previous year. And if we compare sequentially, it has gone up by 22% from INR234.37 crores recorded in Q1 ’25.
On the trading front, average daily turnover that is the ADT of futures and options during Q2 FY ’25 saw a significant increase rising by 27.49% to reach INR2.2 lakh crore compared to the previous quarter’s INR1.72 lakh crore. The increase was propelled higher by options ADT indeed, which grew by 31.71% to almost INR1.93 lakh crore in Q2 versus INR1.46 lakh crore in Q1 of FY ’25. The exchange continues to broad-base its investor base too. The traded clients witnessed a quarter-on-quarter growth of almost 20%, reaching about INR6.8 lakh crores during Q2 of FY ’25 as against INR5.67 lakh crores in the previous quarter of this financial year.
Noteworthy, on September 16, 2024, the total turnover consolidated for futures and options combined recorded an all-time high of INR4.73 lakh crore. Options accounted almost INR4.5 lakh crore out of that. As we all know, there are two critical pillars of a commodity exchange. First is the efficient price discovery, and second, the key risk management against adverse events and price movements. We witnessed this in real-time when the change in customs duty rate in gold and silver were announced in the Union Budget on 23rd July 2024, which led to an immediate fall in domestic prices of these commodities in the spot and derivatives market. MCX was able to provide protection to all our bullion market stakeholders who had hedged on this platform. That was also a historic day for MCX bullion futures and options, both clocking record volumes, futures at INR55,000 crore-plus and options at a whopping INR92,000 crore-plus notional turnover.
More significantly, this instance underscores the importance of domestic stakeholders to hedge within India as the unanticipated change in price resulting from a change in duty rates could only be hedged on a platform, which fully reflects duty-paid Indian commodity prices, something which even the offshore markets cannot offer. On the product front, we have a significant development in order to encourage hedging and improve the hedge efficiency. The exchanger has modified existing gold 1 kg options by monthly expiry contracts. Gold option contracts will now include monthly expiry contracts and this will be in force with effect from Monday, November 11, 2024.
Another new product launch, we are happy to announce the launch of cash-settled cotton seed wash oil futures. This was launched on 15th October, 2024. We appreciate the support given by our stakeholders in generating — making its success and we continue to look-forward to your support there. This contract is a 5-ton trading unit and Kadi, Gujarat is its delivery center. This new futures contract is designed to provide transparency, efficient price discovery, and a vital hedging mechanism for various stakeholders for the cotton seed oil industry, including cotton seed crushers, edible oil refineries, wholesalers and traders. In line with MCX continued efforts towards developing Indian standards for metals, the exchange has recently empanneled one more Indian-led producer M/s Jain Resource Recycling Private Limited at their Tamil Nadu plant. These have been added to the MCX good delivery list. With this, total number of empanel-led producers are now eight and we continue to strive in expanding this list in future.
This trend of empanelling domestic refiners, a part of the national vision of Atmanirbhar Bharat would serve the nation by creating domestic benchmarks, reducing price disparities and encouraging quality recycling of metals. MCX has always been conscious of the needs of stakeholders in the commodity value chain and has been at the forefront in creating and modifying products and processes to suit the varied needs of these stakeholders. In recognition of these efforts, MCX was bestored the exchange of the year titled like the India Gold Conference on 23rd August, 2024 at Bengaluru. In order to foster transparency and rationalize the transaction charges, MCX under supervision of the market regulator has recently introduced a single-tier transaction charge structure for each of the futures and option segments. The rationalization in transaction charges has effectively reduced the charges for the vast majority of our clients. The exchange has also asked members to ensure that the charges on clients are true to level. That is, [Indecipherable] on the end client by a member should not exceed the exact amount as charged by the exchange to the member.
On 16th October, 2023, if we all recall, MCX and MCXCCL together went live with our new-age commodity derivatives platform successfully. We celebrate the first anniversary of that historic event and we congratulate all who are involved in that mega project. We once again extend our sincere gratitude to all stakeholders, regulators, technology service providers, data vendors and member brokers for their ongoing support, guidance, and courage to us. We really thank you.
With this, I conclude the opening remarks and look-forward to discussing more during the Q&A session. Thank you.
Questions and Answers:
Operator
Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Amit Chandra from HDFC Securities. Please go ahead.
Amit Chandra
Yes, sir, thanks for the opportunity. So you mentioned about the increase in participation, wherein the number of retail traders on the platform has increased significantly. But our intention was also to increase the FPI participation. So if I’m not wrong, it was in the range of 1%. So if you can provide some update? So what is happening there? What steps you are taking to increase the FPI participation? And also on the like co-location part, can there be any chance that the co-location can come to the MCX as well?
Manoj Jain
Rishi, if you can take.
Rishi Nathany
Yeah, so thanks for the question. First, to answer your question about FPIs, we already have around 117 FPIs registered in the exchange and we are getting more-and-more of them to trade on the exchange. You have to understand that it is still early days yet. It was only a few months back that FPIs were permitted and enabled on the exchange to participate and we have been seeing healthy participation. We have been seeing a lot of OI coming from the FPIs both in crude and natural gas and we hope that going forward if the regulator so permits, we could see FPIs trade in other commodities as well if the regulator [Indecipherable]. In terms of FPI participation, the ADT has been increasing and we hope to see that this will increase further. In terms of co-location, as of now, the extend norms do not allow for co-location in commodities. As and when the regulator allows co-location in commodities, we will definitely look at bringing it to-market.
Amit Chandra
Okay. And sir, secondly, you have announced that we are — we are launching the monthly expiry and all the gold contract. But in terms of the other products in the pipeline, so it has been like a year since the new platform has been running. And I suppose the first year was where we were not very keen in terms of launching a new product, okay. So from here on as we have completed one year successfully, so can we see some accelerated launches in terms of some of the products, which are in the testing phase as of now? So lastly, you mentioned about the monthly series on a contract which will increase the number of expiries basically specific to crude on the option side, and the index options as well. So I know the index options is right now, the second product which will come after the monthly series, but if you can provide some timelines and where we are in terms of the testing of these products at the back-end and what’s like pending from the regulator side?
Rishi Nathany
So while I cannot give you any specific timelines, all I can tell you is that the exchange always keeps looking at various commodities and new contracts or variants of existing contracts to bring to market, and we are actively pursuing that. As and when we do get a regulatory approval and we have done all our internal testings and everything, we will definitely bring it to market. So in a nutshell, yes, you would see us trying to bring more products to market as we go forward.
Manoj Jain
Just to supplement, Rishi, Amit, I’ll add that, see, there is always a launch cycle and things get launched gradually. So with the successful launch of cotton seed wash oil also, so that proves the system capability scalability and we have also announced the monthly expiries of Gold 1 kg. So yes, there would be a cycle as and when the right contracts and the right approvals and the launch timing is appropriate as considered, you will see a gradual launch. So that’s the whole idea. I mean, we are going ahead slow and steady.
Amit Chandra
Okay. And sir, in terms of the cost, obviously, we have managed the cost well, but the technology cost has come off in this quarter. So is it kind of because after the completion of one year, maybe some of the extra cost relative technology that was required is coming off or is it the new base or there is some one-off in that? And also if you can elaborate on the AMC cost, which will — like which is likely to hit in quarter three. So is it on track? So the AMC cost will hit in quarter three?
Manoj Jain
Hi, Amit. So the IT costs are gradually increased, but still there is some breakeven and we can say a nominal marginal savings compared to what we would have paid in the previous arrangement with 63 Moons. And you are right, the AMC cost of TCS will start coming in from quarter three. So we’ll have to wait-and-see, if they are working with numbers, they will reflect.
Amit Chandra
Okay, sir. Thank you and all the best for the coming quarter.
Manoj Jain
Thank you.
Operator
Thank you. The next question is from the line of Prayesh Jain from Motilal Oswal. Please go ahead.
Prayesh Jain
Yeah. Hi, congratulations on great set of numbers. Sir, firstly on the premium to notional turnover ratio on the option side, that has gone up in this quarter. And so how should we look at this sustainability of the same going ahead? And particularly on the gold contract also, could you — if you could highlight whether the — that would lead to a drop-in premium to notional turnover ratio?
Manoj Jain
Yeah. So see the premium to notional turnover ratio is covered by a host of factors, including volatility and it is very difficult to predict what would be the premium to notional turnover ratio going forward. So we can’t give any future visibility on that.
Prayesh Jain
Okay. And sir, in case with respect to gold monthly contracts, ideally the — if the period reduces, that would lead to a lower premium versus the current contracts?
Manoj Jain
See, ideally, if you look at it, I don’t think so because firstly, if you trade in a bimonthly contract, the premium is higher at the beginning of the contract, but the volume correspondingly is lower. And then as you mature into the contract and reach the expiry, the volume goes up and the premium goes down. Now, if you split that from two months to one month, ideally, I think it should have a similar effect, if not better. So I do not see any negative effect of bringing a monthly contract into the picture. So overall, the premium behavior will still remain the same, that will be high during the launch and they were during the time.
Prayesh Jain
Okay. Sir, secondly on the SGF contribution bit, you know, how do we see that going ahead? And we had contributed in this quarter as well. So the volumes continue to surge the way they are, do you think we need contribution to SGF on a regular basis?
Manoj Jain
So, yes, as a strategic thought process, we do look upon a gradual contribution on SGF on need basis and you would see such numbers, though numbers are small, but idea is to continue to strengthen our SGF for future scalability and new product launches. So that’s a strategic thought process.
Prayesh Jain
Got that, got that. And just one bit on the computer and technology expenses. That has gone up in this quarter. What was the reason for the same?
Manoj Jain
See, in fact, for this quarter, it is marginally reduced. But you see last year we had warranties and all. So as and when the warranties expire, so the AMC cost starts coming in.
Prayesh Jain
Okay. Okay. All right. Thank you.
Operator
Thank you. The next question is from the line of Bharat Gupta from Fair Value Capital. Please go ahead.
Parikshit Gupta
Hello, am I audible?
Operator
No, sir, could you come a bit close to your handset, you sound a bit distant?
Parikshit Gupta
Is it better now?
Operator
No, sir, not really.
Parikshit Gupta
I’m using my headset.
Operator
Yeah, now it’s fine.
Parikshit Gupta
Okay. Thank you very much for the opportunity. And my name is Parikshit Gupta. So my first question is a more fundamental question. While we understand that the volumes of trading usually increases during times of economic uncertainty. We saw this in the post-COVID era as well as during this calendar year because of the geopolitical tensions and the unfortunate events in Middle East and Europe. I just wanted to understand, is there a way to understand if the volumes that we see right now, how much of it would be sustainable going forward?
Rishi Nathany
Okay. So, Parikshit to answer your question, first of all, volumes are only not driven by geopolitical concerns. If you see that the overall participation base of the exchange has been going up, which means all the participants on the exchange, whether it be hedgers, physical market participants, retail traders, HNIs, FPIs, everything is going up. Now, when overall participation goes up, naturally you would see a better turnover. Also what adds to volatility in the market is, of course, these geopolitical tensions, but it is not just those which drive the market. So there are a host of factors which drive volumes. So it’s very difficult to quantify that how much geopolitical tension will happen and how much it will sustain volume or not. But all I can say is that if we continue with the trend of growing participant base, our volumes in any ways continue to grow from strength to strength.
Parikshit Gupta
Absolutely, sir. I completely understand that the driver of volume is the market increasing the market depth. So thank you for explaining that. My second question is on the India International Bullion Holdings, please. I will understand that even in the previous quarter, you mentioned it is very hard to predict how much of a business might generate going forward, and that the revenue was about — as the business generated was about INR2 crores overall. Do we have any sense for the current quarter and next quarter as well see?
Rishi Nathany
See, we cannot give any future predictions on business of IIBH, all we can say is that it is a relatively new exchange. The gestation period and the profitability cycle of any exchange is a long-drawn process. Having said that, IIBH has already broken even and also delivered a small profit. So we hope that going forward, it will continue to grow from strength to strength.
Parikshit Gupta
Understood. Thank you very much. And my final question is about cash-on-hand. Please correct me if I’m wrong. I believe the cash-on-hand for investments is about INR1,500 crores odd at this end of the quarter. Do we have any plans of deploying that capital in site right now?
Manoj Jain
So the amount what you are mentioning includes our current investments into subsidiaries also. See, the cash will be utilized in the business. We also have to maintain some cash for safety in case of any claims or any issues. There is also some bit of growth capital. We may have to invest in technology in near future. So we are retaining that cash, but the Board is aware and Board may take a call on how to utilize these surplus cash in future.
Parikshit Gupta
Understood. Thank you very much. That’s all from my side. I’ll — thank you again for your time.
Operator
Thank you. The next question is from the line of Mohit Motwani from Tara Capital. Please go ahead.
Mohit Motwani
Hi, thank you for the opportunity. My first question is on the premium ratio. I know that you have said there are host of factors, but in the previous calls, you have also said that many participants are trading out of the money options as a result of which that ultimately translates into a lower premium ratio. Now in the months of September and October, we have seen an uptick in the premium ratio and it has coincided with the heightened volatility — volatility in crude. So just want to clarify if this increase in premium ratio can be directly attributed to the heightened volatility or there is some difference in the behavior of participants as well?
Rishi Nathany
See, that is very difficult to quantify. The premium ratio is a function of various factors as already told to you. So it’s very difficult to dissect and give it to you.
Mohit Motwani
[Speech overlap]. Sure, sure. Okay. And my second question is a bookkeeping one. So can you let us know what are the revenue from options and futures and how to think about the effective tax rate since it’s been in 19% to 20% rates in the last three quarters, so how to think about it for the near and medium term?
Manoj Jain
So see, revenue for futures was approximately 30% and options were approximately 70%. And effective tax rate will remain in the range of 21% to 22%, 23%.
Mohit Motwani
21% to 23%, right?
Manoj Jain
Yeah.
Mohit Motwani
Sure, thank you. That’s all from my end. Thank you so much.
Operator
Thank you. The next question is from the line of Chintan Sheth from Girik Capital. Please go ahead.
Chintan Sheth
Thank you for the opportunity. Am I audible? Hello?
Operator
Go ahead, you are audible.
Chintan Sheth
Yeah, sure. Okay. Sorry. I was not getting. So my question was — first question was on the new launches. You mentioned the monthly gold option contract will be — we’ll be launching on November 11. Have I heard correctly or it’s future contract?
Manoj Jain
No, no. So in gold, we have bi-monthly futures and bi-monthly option contracts. The bi-monthly futures will continue as it is for now. We are now making the options monthly from November.
Chintan Sheth
Okay. As you — doesn’t it — we are thinking about launching the futures first and then the options later. I think that was the plan earlier or am I incorrect on that part?
Manoj Jain
No, so whatever the plan was that is being implemented.
Chintan Sheth
Okay. Okay. So we were looking for option monthly only to start with on the futures, we are not looking at it currently.
Manoj Jain
I didn’t say we are not looking at it, I’m saying that we are implementing options first and there are —
Chintan Sheth
Okay.
Manoj Jain
We could, see that experience and then take a call.
Chintan Sheth
Sure. And secondly, on the index options, which we were planning index features and options, which we were planning because that will be the precursor to the weekly expiry, which we can — we can launch given that now the CDS regularized it and limitting it to single index contract. What are the management thought or any indication where are we in terms of testing and filing to the SEBI [phonetic] regulators in the — for the approval?
Manoj Jain
So while I can’t give you specifics, all we can say is that there are a host of products we are looking at studying, which are in various stages of testing or study or applying or you know, the pipeline is there and what I can say with certainty is going-forward, you would see a few product launches.
Chintan Sheth
Okay. And just on the revenue split, you mentioned 70/30, but if you can call out the — this is on the standalone revenue, if you can spell out on the —
Manoj Jain
Standalone.
Chintan Sheth
Standalone. Okay, then it’s — then I’ll be competing. And on the on the consolidated cost front, if I look at the software support cost, which declined from INR22 crores to [Indecipherable] INR21 crores around sequentially, despite the revenue energy basket continue to be performing well. I believe that revenue share to CMA should have sequentially increased implying that the other software costs are likely to get reduced during the quarter. If you can quantify how much of the revenue should we have shared with the CME on the energy contract?
Manoj Jain
So the revenue — what we are making payment to CME is shown as product license fees. That is item number B in expenses. It is not one of IT expenses.
Chintan Sheth
Sure. So I’m talking about that only. I’m sorry, I’m talking about that only. The cost declined from INR22 crores to INR20 crores or something —
Manoj Jain
That is the IT cost and what you’re talking of CMEs in product license fees, that is the second line, which has increased from INR13 crores sequentially to INR17 crores.
Chintan Sheth
INR13 crores to INR17 crores, right. Okay, I’m also getting that number. Okay. I’ll jump back in queue. Thank you.
Operator
Thank you. The next question is from the line of Shalini Gupta from East India Securities. Please go ahead. Shalini, your line has been unmuted. Please go ahead with your question. As there is no response, the next question is from the line of Sanketh Godha from Avendus Spark. Please go ahead.
Sanketh Godha
Yeah, thank you for the opportunity. Sir, can you tell me how much is the float income in the current — current quarter and corresponding margin money what we have in the exchange or Clearing Ccorporation? And also just wanted to know your update on SEBI thing to share the float income with declines. Anything what you have heard on those lines? That’s my first question. Second question, sir, was the other income, which was up almost by 34% sequentially, just wanted to understand what led to that increase and also if you can quantify the nature of cash in hands, that is other investments, what led to that increase in the other income? Yeah, those are my two questions, sir.
Chandresh Shah
Yeah. Sanketh, so the treasury income was around INR20 crores for this quarter.
Sanketh Godha
Yeah.
Chandresh Shah
And it has increased from INR18 crores to INR20 crores.
Sanketh Godha
When you say treasury income, it is float income, right?
Chandresh Shah
Margin — it is everything. It is float income, it is our own surplus funds, everything.
Sanketh Godha
Okay. So it increased from INR18 crores previous quarter to INR20 crores in the current quarter [speech overlap]?
Chandresh Shah
INR17 crores to INR20 crores. INR17 crores points something to INR20 crores.
Sanketh Godha
Okay.
Chandresh Shah
Yeah. And the next question you said was on the cash.
Sanketh Godha
Yeah, the cash on books, because the other income — other operating — other income, which I see it is INR25 crores.
Chandresh Shah
Yeah.
Sanketh Godha
That is basically the interest income down on the cash what we have, right? So just wanted to understand [speech overlap]?
Chandresh Shah
It is largely that. So see the absolute amount of the surplus funds also increases, margin money held with us also increases with the open interest. So the other income from that also increases.
Sanketh Godha
Okay. Got it, sir. And lastly, if you can speak about — see — see, we launched a steel, it did not take-off much, and we in the past had an agreement with electricity derivative to be launched through [Indecipherable] from IX as underlying. So any update on new products like electricity derivative because now the platform is up and running, it’s been a year as someone asked. So just wanted to understand the new product launches?
Manoj Jain
Yeah, Sanketh, so as I’ve repeated earlier, is that we are working on the entire product basket which we want to launch and why we cannot give you any specific timeline or any specific product in — right now, but all we can say is going forward, you will see certain launches, since you have already spoken specifically about electricity futures, we have — we are still waiting for the regulators to approve that. There is still that which we are waiting on. And as we go ahead, you will — I’m sure you will see more launches and I’m sure that will add to our product basket.
Chandresh Shah
So Sanket, I want to add one more thing. Yeah, see, it is not like the new products are getting launched and it will be add-up to significant volumes, okay. Every product will have some amount of gestation period. That means it will take time to really mature. So while every effort will be made to launch the new product, but we should also be judiciously launching it such that every product will get enough time to really mature. That is how we have to look at it.
Sanketh Godha
Fair point, sir. Got it. So sir, in that sense, you would say that steel will take its own time to evolve and become a vibrant product in our market?
Rishi Nathany
So there will be multiple — see, if we launch there is — it is not always feasible or practical that every product will be a successful product. It takes time to really mature. Second, we also will examine if at all any modifications are required in the contract and we’ll also go to the market and study what could be the first good reason that really has led to not significant interest in this particular contract. So it is a continuous exercise. So it doesn’t mean that immediately we can consider it as a failure, but so we will be — definitely will be studying this product specifically. And again if needed, changes will be done to the product. And also accordingly, we will again bring it forward the product for the trading.
Sanketh Godha
Got it, sir. And last one, do you see any revival in nickel [phonetic] sir or you can say that globally that product has become almost dead for the futures market?
Manoj Jain
Yeah, nickel is a very good product, in fact, but because of that earlier episodes, it had — has died, but we are confident that again we will come out with that product. We’ll try to revive that one, but difficult to say what kind of changes right now we’ll bring into this particular product. So — but we are — it is very much within our to really see that how we can able to improve the performance of this contract.
Sanketh Godha
Got it, sir. Perfect. That’s it from my side. Thank you.
Operator
Thank you. The next question is from the line of Devesh Agarwal from Inani Securities. Please go ahead.
Devesh Agarwal
Hello?
Operator
Yes sir, you are audible.
Devesh Agarwal
Yeah, hi, this is Devesh Agarwal from IIFL Securities. Thank you sir for the opportunity and very good afternoon and congratulations on a healthy set of numbers. Sir, my first question to you is basically very much our dependence is now on four products, that’s two on the bullion and two on the energy side. Does this worry you? And historically, base metals have been a good contributor to our revenues as well. But what are the challenges that you are facing on the base metal side? And do you see a scope for the recovery of base metal volumes from here on?
Praveen D.G.
Yes. Historically like if you take some years back, of course, the metal happened to contribute significantly to the volume. But we all know that we had to make this contract a delivery-based contract and also still you know that there are some issues related to the GST, okay with multiple delivery centers over there. So these are the factors that is really dragging this particular metal basket, but it is not like it, it’s not significantly worrying factor because if you take any global exchange, yes, there are certain products which really contribute significantly to the exchange. But if you look at the MCA, you have a diversified basket because you have bullion, you have metal, some energy and also we could be able to take some lead also in the index for it. So that’s why it’s not immediately worrying, but of course, we will make every effort to diversify that one. So one of our efforts have been witnessed in this monthly — launch of this monthly Gold 1 kg options also.
Devesh Agarwal
But we’ve been hearing this that because of this increase in the size of the contract, base metal has seen a decline in the liquidity. Are there any dialogue with the regulator to kind of again cut down on the size of the contract? Is that a possibility or at this point in time, there are no discussions around that?
Manoj Jain
You are talking about nickel?
Devesh Agarwal
No, generally based metal contracts, including copper and others.
Manoj Jain
So many already we have launched. No, no, so just to explain that it is not the size of the contract. What Praveen was trying to tell you is that earlier these contracts were cash-settled and then they were moved to a deliverable contract. Moreover, from a single delivery center, there have been multiple delivery centers, which leads to issues in GST. So that is why these contracts are facing the kind of headwinds they are. Having said that, we are trying to work on whatever we can to make sure that these contracts also revive. And if you see from last fiscal to the current fiscal, base metal has also shown a decent improvement. And going forward, we hope that the base metal contracts will also do very well.
Devesh Agarwal
Right, sir. And secondly, sir, you did mention about new client addition. Could you just share some profile in terms of, are these people who are active on equity and have now started trading commodities? So that gives us a basically enough size that on equity side, we have almost 50 lakh people trading equities and are we heading to that direction or some profiling of this new clients that you have added over the last two years?
Manoj Jain
So we are a commodity exchange. We do not have an equity segment. So even if they are trading on equities on another exchange, we will not know whether they are trading on equities or not. So as far as we are concerned, all the people who are trading in commodities are trading with us in commodities. Having said that, we have a very healthy mix, which has been consistently maintained of futures to options as well as all these people coming and trading on the exchange. So anyways, whoever trades — see, let me tell you that in equities or currency or whichever other segment, you would only find investors or traders, but commodities is very different that apart from these investors, traders, FPIs, etc., you will also find a lot of physical market participation, will find actual hedgers and people who are actually in the business. So, I don’t think those hedgers would be trading in equities. Apart from that, the rest of the people who are trading, it is very difficult to say whether they are trading in equities or not?
Devesh Agarwal
Okay, sir. And sir, in terms of new contracts, we had in the past talked about [Indecipherable] contract. Any update that you can share around that, whether we are still pursuing that or what is — at what stage is that product?
Rishi Nathany
See, again, I will not be able to give a specific timeline on that. We get — we are in the testing phase and once we’ve done it, we will definitely come back to you.
Devesh Agarwal
Sure sir. And then last one from my side. The date that you set for the launch of this monthly Gold expiry, is it 21st or 11th?
Rishi Nathany
11 November?
Devesh Agarwal
11th November. All right. Thank you so much and all the very best. T
Manoj Jain
Thank you so much.
Operator
Thank you. The next question is from the line of Heenal Gada from UBS Securities. Please go ahead.
Heenal Gada
Hi, thanks for the opportunity. So just a couple of questions. First, which gold future contract would be the most active on the platform and that is seeing like high-volume traction? And secondly, could you help us with any expected timeline for the new CEO joining?
Manoj Jain
So the gold contract, which is most active is the 1 kg contract and that is where we see maximum traction both in futures and options. Regarding the new CEO, we — I mean, I’m sure that we’ll inform the market with the specific date.
Heenal Gada
Sure, sir. And also apologies if this question has already been answered earlier, I was cut-off for a couple of minutes. So in terms of the new product launches, would it be possible for you to share what is in our pipeline from which we’ve already applied to study for approval?
Manoj Jain
So ma’am, as I said earlier that there are a lot of products at various stages with us with our IT teams for testing or with regulatory approval or whatever, where we are in various stages of seeking regulatory approval. Now, it would be very difficult to quantify that. Having said that, what we can definitely say is that going forward, you will see a better pipeline of product launches.
Heenal Gada
Right sir. Okay. Thank you so much.
Operator
Thank you. The next question is from the line of Subramanian Iyer from Morgan Stanley. Please go ahead.
Subramanian Iyer
Hello. Thanks for the opportunity. I had a question on the composition of volumes. So when I look at SEBI data, what it shows is that there are two big parts in your basically composition of volumes. One is proprietary traders and then there is others. Basically both the farmers, foreign participants, hedgers, domestic financial institutions, all are very low as per the SEBI data. What is the major composition of — major component of others, which is almost 50%? Is it retail — I mean, how much of it is retail and what are the other nature of participants?
Rishi Nathany
So we just like to clarify that we have a very healthy ratio of plant to drop [phonetic]. Whereas in this quarter, if you see, 52% in futures and 43% in options have been plans and the rest only is dropped. So it is quite evenly balanced. Within the client space, the ratio between who is a hedger, who is not, that is — that is something we cannot provide.
Manoj Jain
Just to add to what Mr. Rishi has said. As you are aware, see, we will not be the contributors. If you see market, it just will not be the contributors — principal contributor to the volume. In fact, they will be adding to the open interest because their interest is more into the [Indecipherable], not into the trading. Okay. So if you look at even the open interest like that is what I think we have been publishing in the publishing to the market also that what hedges as a percentage to the open interest. And of course, again, it is dependent upon of disclosures made by particular people, whether he is a value chain participant or something, but the two intent of the market participant never will be — we will be known.
Subramanian Iyer
Thanks. And what proportion of volume is actually contributed by retail?
Praveen D.G.
So we don’t have that number, but if you look at the client participation, I think that anyway that those details are given in the part of our presentation.
Manoj Jain
If you see the Page 8 of our presentation, it shows you what is the percentage of client trading.
Subramanian Iyer
Sure. Thank you.
Manoj Jain
Welcome.
Operator
Thank you. The next question is from the line of Arpit Shah from Stallion Asset. Please go ahead.
Arpit Shah
Hello, am I audible?
Operator
Yes, sir, you are.
Arpit Shah
Thank you for disclosing your premium numbers. Thank you for that on the exchange and the data front, which you have clarified earlier on. My question is pertaining to the — if you can quantify the AMC charges, which is going to be charged in Q3 FY ’25 from [Indecipherable], so what will be that charges?
Chandresh Shah
So see we cannot share that number, but if you track the IT cost, you will get some idea about that. Contractually, we are not allowed to share that number. T
Arpit Shah
[Indecipherable] in the information technology cost?
Chandresh Shah
Yes.
Arpit Shah
And some proportion will be added to depreciation or anything will be soon?
Chandresh Shah
Sorry, it will be —
Arpit Shah
Additive depreciation.
Chandresh Shah
It is — it will be hedged in IT cost only.
Arpit Shah
And IT per [Indecipherable], as that was announced earlier in some of the previous cost is going around INR60 crores for TCS. Would that include TCR AMC or that is a separate number, INR60 crores plus AMC or INR60 crores includes the AMG number for this?
Chandresh Shah
We have never given any future guidance on any of the numbers?
Arpit Shah
I remember earlier calls, we had disclosed the INR60 crores that is the number which will come in the technology cost. So did that number include the AMC number or that would have been separated from that?
Chandresh Shah
No, no, no, the cost will be —
Manoj Jain
We may not have given that in this context. Maybe you are probably linking it to some other number which would have been given. But as Chandresh just now mentioned, we are not disclosing the private contract detail. Even that notice in which context, not sure please?
Arpit Shah
I think INR60 crores was in the context, that was a number that you have probably — that was probably the cost that we were paying to 63 Moons on that specific volumes. Since now the volumes have increased, we would see operating leverage on that cost line. That INR60 crores was in that context, I think so one of the Q4 or Q3 calls we were speaking more in that term?Hello?
Chandresh Shah
See that arrangement with 63 Moons was different. It was a little bit of variable kind of thing, but the arrangement with TCS is very different. So the numbers you will have to wait and see for the coming quarters.
Arpit Shah
Got it. Would it be very significant number or would it be a very [speech overlap].
Chandresh Shah
We cannot comment right now, you’d have to wait and see the results for third quarter.
Arpit Shah
Okay, okay. Thank you so much.
Operator
Thank you. The next question is from the line of Sanketh Godha from Avendus Spark. Please go ahead.
Sanketh Godha
Thank you for the opportunity again. Sir, we saw the crude volumes to pick-up in the options market because the margins were meaningfully very high in the futures market for crude and natural gas. But in gold, it is meaningfully still low. So just wanted to understand that despite — I mean, I understand that you launched a monthly contract, which should increase the vibrancy of that product. But given the margin requirement is still very low in futures for gold, do you think it will trickle down as greatly as it happened in crude or natural gas for gold in your internal assessment?
Manoj Jain
So very simply, we are bringing products to market. We are trying to provide that bouquet of products which the market wants. Now whether the market trades in futures or they prefer to trading options is a choice of market participants. Our job is to provide that platform and a wider variety of choices.
Sanketh Godha
Got it, sir. And lastly, your margin in the crude still remains at 33 percentage, right, it has not changed? Initial margin sir. I mean to say?
Manoj Jain
It is around that level.
Sanketh Godha
Okay. Okay, perfect, sir. That’s it from my side. Thank you.
Operator
Thank you. Last question is from the line of Chintan Sheth from Girik Capital. Please go ahead.
Chintan Sheth
Yes, thank you for the follow-up. The question I had was on the participation side. In the presentation itself, we are seeing current trading percentage in the options has been on a decline. So this quarter it’s around 43% versus a few quarters back, it used to be about 50% on the option side. Anything to read into it, whether it is driven by say environment of FPI is coming in that is also I think reducing the clients saving percentage? Anything you want to point out?
Rishi Nathany
No there is nothing specific to point out. We still have a very healthy ratio. So in the Q2 of FY ’23, ’24, it was around 47%, now it’s 43.5%. Having said that, overall volumes are growing and the overall client percentage is — while the percentage has gone down, but the overall volume of clients has also gone up. So as long as that continues to grow in every segment and every participant base — every participant segment continues to grow, I don’t think there is anything much to read in it.
Manoj Jain
Yes. Just to add to what Rishi has said. In a growing market, I think we should not be really worried about the percentages. In fact, overall market, you can see that growth is happening. Of course, there is significant change that is happening in terms of trading client percentage.
Rishi Nathany
And also that the overall number of clients is going up. So that is also something that —
Manoj Jain
That is increasing because the customer — number of customers are also growing, but the percentage is declining. That is — that was the observation I was coming to. It should ideally — with the increase in participation —
Rishi Nathany
Growing volume. So I’m saying it is growing volume, right. In a growing volume, I must say that all the things will know what [speech overlap] here and there.
Chandresh Shah
Percentages could change over quarters from one other and back, right?
Chintan Sheth
I agree. Okay. Got it. And on the cash side, if you can just point out that the total cash we are currently — cash and investments, free investments which we are holding and you mentioned the Board is aware about it. But anything in terms of where are we in terms of — what will be the utilization of the team? What should one expect over the course of a year?
Chandresh Shah
See cash utilization, I already had responded earlier that the Board will take a call what is to be used first. But the cash is retained for business growth, investments in infrastructure, IT systems and development of new software. Also for having maintaining some capital to unforeseen circumstances and buffer.
Chintan Sheth
How much — how much we are planning to do the capex on the infra side this year? And what is the current cash balance?
Chandresh Shah
There is a significant increase in capex, but in near future, there could be some further reinvestments.
Chintan Sheth
Okay. And how much cash we are currently catching investments we have on the balance sheet base?
Chandresh Shah
Around INR1,000 crore.
Chintan Sheth
INR1,000 crores. Including investments, it should be around more than that, right? Those are the [speech overlap]?
Chandresh Shah
Yes, right we are talking about surplus cash, not the investment in associates and [Indecipherable].
Chintan Sheth
Okay, surplus cash. Okay, got it. Thank you.
Operator
Thank you. Ladies and gentlemen, that was the last question for today. We have reached the end of our Q&A session. I would now like to hand the conference over to Mr. Manoj Jain for closing comments.
Manoj Jain
Thank you, Del. Once again, our heartfelt gratitude to all our stakeholders, regulators, participants, and our analysts for your continued attention, feedback, and encouragement. We continue to grow and add value together. Thank you. Thank you very much.
Operator
[Operator Closing Remarks].