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Such trades led to a near doubling in the exchanges turnover from `4,695 crore in December 2013 to `8,660 crore in February. Since then,
turnover on the exchange has declined and settled close to `1000 crore. The exchange finally shut shop in July.
The exchange was not left with any money to carry out the business, said a person aware of the developments asking not to be identified
due to the sensitivity of the matter.
As of July, UCX was the smallest of the national commodity exchanges. According to the fortnightly dissemination data by FMC, UCX
reported a turnover of `1,111.80 crore between 1 and 15 July. MCX leads the turnover table with `2.09 trillion followed by National
Commodity and Derivatives Exchange Ltd (NCDEX) at `56,079.65 crore. Ace Derivatives and Commodity Exchange and National
Multi Commodity Exchange (NMCE) clocked a turnover of `1,851 crore and `1,374.41 crore, respectively, during the fortnight ended 15
July.
It is unclear whether any genuine investors have been hurt by the fraudulent practices found at UCX.
Most of the investors trade on either MCX or NCDEX because they are more liquid and between them they offer the entire range of
agricultural and non-agricultural commodities, said an analyst who declined to be identified.
The suspension of trading on UCX comes close on the heels of the Indian Commodity Exchange (ICEX), which stopped operations in
April. ICEX also attributed the closure to lacklustre business performance.
Experts say that commodity exchanges can survive only if they are able to provide some value addition to the existing list of commodities
and contracts as both MCX and NCDEX provide ample liquidity.
Value addition is the key to the success of any commodity exchange, says Naveen Mathur, associate director, commodities and
currencies, Angel Broking Ltd. If there is no product differentiator, then there will be no interest as the market already has liquid
exchanges. The potential is large but there has to be a seamless integration in terms of logistics, bandwidth and IT infrastructure from a
members perspective, he says.