MCX Stock Exchange (MCX-SX) appears to be in no hurry to garner market share by levying lower charges compared to the NSE or the BSE.
Jignesh Shah, Vice-Chairman, MCX-SX, said the exchange will focus on expanding market reach, offer quality investor services and innovative products to drive liquidity rather than undercutting costs of the competitors.
“We are in a marathon and do not believe in sprint. It should not so happen that we register a world record turnover on day one and you have to search our presence from day two. We want to build a strong foundation and build ourselves on it,” he said in a veiled reference to the United Stock Exchange.
The USE clocked the highest-ever turnover of Rs 45,486 crore on its currency futures debut in September last year, but the turnover fell steadily thereafter.
Speaking to media after the launch of the exchange by Finance Minister P. Chidambaram on Saturday, Shah said all the trades on the exchange will be cleared by the AAA-rated MCX-SX Clearing Corporation.
There will be 1,116 companies listed on the ‘permitted to trade’ category of the exchange. It launched a free-flow index — SX-40 — comprising large cap and liquid stocks representing diverse sectors of the economy.
With the base of 10,000 points, SX-40 has been valued at 11,419.17. The exchange plans to launch more indices tracking each sector of the economy. Forwards and options will be available on all the 150 stocks approved by market regulator SEBI.
Though the exchange received applications from 700 members, SEBI has cleared 405 submissions while others are under consideration of the regulator.
Assuring that the exchange will strive to bring down trading cost, Shah said it will take a while as the impact cost can come down only if liquidity improves. For instance, he said, impact cost of trading in metals in India is one of the lowest in the world.
The exchange expects a new financial literacy programme (through tie-ups with universities across 29 states, including Mizoram and Nagaland) to bring new investors and drive liquidity in the long run.
On recent freak trades in competing stock exchanges, he said MCX-SX will strive to avoid such situations through technological innovation.