MCX-SX on Wednesday announced that it will launch its equity trading platform by 2014, posing a challenge to established players Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).
MCX,-SX a joint venture between Financial Technologies India (FTIL) and Multi Commodity Stock Exchange (MCX), on Tuesday got the approval of market regulator Securities and Exchange Board of India (SEBI) to operate a full-fledged stock exchange.While FTIL shares ended with a gain of 3.1% at R776, MCX fell by 2.5% at R1,129 on the BSE on Wednesday. The BSE approval is conditional and promoter companies will have to slash stakes in the exchange to 5% within 18 months. MCX and FTIL jointly hold 10% in MCX-SX according to the company's website. Both companies said they will dilute their stakes within 18 months.
While both FTIL and MCX shares rose in morning trade, both pared gains when the market took notice of the condition.
Around R2,000 crore and R10,000 crore worth of shares are currently traded daily on the BSE and NSE. Aggressive strategising on the part of MCX-SX could seriously dent this.
At present, MCX-SX only offers a trading platform for currency futures. SEBI has allowed the exchange to deal in equity, wholesale debt and futures (equity and interest-rate).
Talking about the new products to be launched, Joseph Massey, managing director, MCX-SX, said, "We remain committed to the development of the domestic capital market, catering to the growing needs of investors for suitable investment avenues and to the corporate sector for raising risk and debt capital and for variety of instruments used by the industry for risk mitigation. We would soon be formally announcing our future plans for implementing these segments."
"Allowing listing for stock exchanges will spur a transparent policy regime and encourage investments for market development and investor education," said Jignesh Shah, vice chairman, MCX-SX.