MCX Shares Surge as Margin Relief Fuels Bullion Trade – But Is the Rally Justified?
Shares of Multi Commodity Exchange of India (MCX) have experienced a dramatic surge, more than doubling in value over the past year, driven by a significant rally in bullion prices. However, recent corrections in gold and silver, coupled with the withdrawal of additional margin requirements, raise the question: has the stock’s valuation become stretched?
The Bullion Boom and Margin Adjustments
In 2025, silver prices soared by 170%, while gold climbed over 60%. This momentum continued into early 2026, with silver initially rising more than 70% before a sharp 42% correction from its January 29 peak of Rs 4.20 lakh. Gold also experienced a cooling-off period, slipping 20% from its peak of Rs 1.93 lakh.
These price swings prompted exchanges to increase margin requirements to curb speculative trading and manage volatility. Specifically, average margin requirements for silver futures increased to 72% in February 2026, up from 15% previously, while gold futures margins rose from 10% to 30%. On February 19, 2026, MCX and the National Stock Exchange (NSE) removed the additional 3% margin on gold futures and the 7% margin on silver futures, providing relief to traders and contributing to a 4% jump in MCX shares on Thursday.
From Futures to Options: A Shifting Landscape
The increased margin requirements initially led to a contraction in futures trading activity. Gold futures average daily turnover (ADTV) fell 41% month-on-month to Rs 33,600 crore in February 2026, while silver futures ADTV declined 58% to Rs 22,700 crore over the same period. However, mirroring a similar trend observed during the 2020 crude oil price shock, options trading has seen increased participation.
During the COVID-19 pandemic, when crude oil prices turned negative, MCX increased margin requirements on crude futures. This led to a decline in futures trading volume but a surge in crude oil options premium ADTV, rising from Rs 5.5 crore in FY21 to Rs 2,400 crore in FY26-to-date. This suggests a structural shift in trader preference towards options as a way to manage risk and capitalize on volatility.
The CME Comparison: Is MCX Following a Similar Trajectory?
Analysts are drawing parallels between MCX’s current situation and the experience of the Chicago Mercantile Exchange (CME), the world’s largest commodity derivatives exchange. Between 2004 and 2007, CME witnessed exponential growth in trading volumes, accompanied by a significant re-rating of its stock. The CME’s trailing P/E multiple expanded from 24.62x in January 2004 to a peak of 49.31x in November 2006, trading above 40x earnings for 24 months.
This comparison raises the question of whether MCX’s 113% run-up is justified, or if the stock has already priced in future growth potential.
Future Outlook and Projections
ICICI Securities maintains an “Add” rating on MCX with a target price of Rs 2,780 per share, representing a 19% upside from current levels. Projections indicate that MCX’s futures ADTV could reach Rs 66,500 crore in FY26, rising to Rs 80,000 crore in FY27 and Rs 90,000 crore in FY28.
In the options segment, premium ADTV is estimated at Rs 6,200 crore in FY26, Rs 8,100 crore in FY27, and Rs 9,500 crore in FY28. These projections suggest continued growth in both futures and options trading activity.
Frequently Asked Questions
Q: What triggered the recent surge in MCX shares?
A: The withdrawal of additional margins on gold and silver futures contracts on February 19, 2026, contributed to the increase in MCX share prices.
Q: What is the significance of the shift from futures to options trading?
A: The shift suggests traders are increasingly using options to manage risk and capitalize on volatility, potentially indicating a more sophisticated trading environment.
Q: What is the outlook for MCX shares according to ICICI Securities?
A: ICICI Securities has an “Add” rating on MCX with a target price of Rs 2,780, implying a 19% upside potential.
Q: What happened with margin requirements in February 2026?
A: Additional margins of 3% on gold futures and 7% on silver futures were withdrawn with effect from February 19, 2026.
Did you know? The removal of additional margins is intended to reduce the capital required for traders to execute contracts, potentially boosting trading volumes.
Stay informed about the latest market trends and investment opportunities. Explore more articles on commodity trading and market analysis to enhance your financial knowledge.
