Investments in commodities, including gold and silver, which surged to record prices, not only yielded strong returns for traders but also helped brokers increase their share of revenue from the derivatives segment in the October-December quarter.
For online investing platform Groww, income from commodity derivatives made up 4% of total income in Q3 of FY26. In the same quarter last year, the income from commodity derivatives was negligible, as per its investor presentation.
Angel One’s income from commodity derivatives increased to 7% of gross revenue in the third quarter from 4.5% a year earlier, it said in an investor presentation.
Revenue from commodity derivatives made up 6.9% of the total broking revenue for Anand Rathi Share and Stock Brokers in Q3 from 2.9% a year ago, a growth of 129%, the company said.
Mirae Asset Sharekhan posted a 70% (q-o-q) increase in revenue from commodity derivatives.
The increased revenue share from commodity derivatives came on the back of heightened trading activity in commodities, especially gold and silver, as well as restrictions on equity options, which led investors to seek alternative assets for investments.
The average daily turnover of all commodity futures on the Multi Commodity Exchange of India (MCX) tripled to ₹84,472 crore in Q3 from a year earlier, according to the exchange’s earnings presentation. Gold and silver accounted for 78% of futures turnover on the MCX in the quarter.
The average daily premium turnover for all commodity options doubled to ₹7,104 crore in the same period. The MCX holds a 99% share in bullion, base metals and energy derivatives.
Sunil Katke, head of the commodities retail business at Kotak Securities, said curbs on multiple weekly equity options have opened up avenues for traders to explore alternative asset classes such as commodities. As gold and silver rallied sharply amid muted equity returns, commodities emerged as the preferred choice and brokers capitalized on this opportunity too, he added.
Muted participation
However, Mehul Koradia, chief strategy officer at Mirae Asset Sharekhan, said that retail participation in commodities has increased, but not in line with the sharp rise in volumes.
“While trading volumes for commodities have nearly doubled, participation of retail clients has not grown in proportion to volumes. Unlike equities, where bull runs typically bring a surge in retail participation, this trend has been more muted in commodities, at least within the firm’s own client base,” said Koradia.
The total number of clients who traded in commodity derivatives on the MCX in the third quarter rose 40% year-on-year to 1.11 million, at a slower pace than the increase in volumes.
From here on, brokers expect income from commodity derivatives to sustain at more or less the same levels.
MCX gold futures climbed to a record ₹193,096 per 10 grams on 29 January, while the MCX silver price touched an all-time high of ₹420,048 per kg, according to data on the exchange's website.
When gold and silver prices started to decline on 30 January, margins increased sharply. Exchanges typically increase margin requirements when the price of a commodity falls sharply or experiences high volatility to moderate the risk of trader defaults.
Margins for silver derivative contracts increased sharply from around 17% to nearly 70%, while margins for gold derivatives rose from about 8% to almost 30% due to elevated market volatility, Katke said.
"Higher margins reduce participation from traders with smaller capital, making options contracts more attractive as buyers are required to pay only premiums and not margins. Once volatility subsides and margins normalize, participation should return,” Katke added.
Nilesh Sharma, executive director and president of SAMCO Securities, said that from a revenue standpoint, the impact of this increase in commodity trading during the current quarter has therefore been incremental rather than transformative, and it has not at all been sufficient to offset the broader slowdown in derivatives income.
Commodity derivatives are expected to remain a supplementary part of the revenue mix rather than a core driver, Sharma added.