Within days of the country’s top stock exchange NSE deciding to levy a transaction charge for currency derivatives trade, rival MCX-SX has followed suit by announcing charges of its own for this segment.
The charges imposed by MCX-SX are broadly similar to those of the National Stock Exchange and both the bourses would be levying them with effect from Monday (August 22).
Another currency derivatives player, the United Stock Exchange (USE), has said it will decide later this month on the imposition of trading charges in the segment.
“We have opted for fair transaction pricing to ensure healthy development of the capital market as an unhealthy price war has the potential of weakening an institution and affecting the long-term stability of the market,” MCX Stock Exchange (MCX-SX) Managing Director and CEO, Mr Joseph Massey, said.
Currency derivatives trading began in India in August 2009. The NSE was the first player and two others —MCX-SX and USE — entered the market later.
However, no charges were being levied so far, which led to MCX-SX complaining to the Competition Commission of India (CCI) that it was not able to impose a charge on currency derivatives trade because of the NSE’s zero-pricing regime.
In its order dated June 23, the CCI pronounced the NSE guilty of abusing its dominant market position and asked it to stop unfair trading practices like subsidising services.
Thereafter, the NSE on August 12 announced the levy of charges for the segment. Nevertheless, it has also challenged the CCI order.
The MCX-SX said in a circular dated August 18, 2011, that it would levy a charge of up to Rs 1.10 per lakh of the average daily traded value.
Furthermore, it would charge an admission fee of Rs 2.5 lakh for trading members and Rs 50 lakh for clearing members on all applications received on or after August 22.
Also, a contribution of Re 0.05 per lakh of the traded value would be collected from the members towards the MCX-SX Investor Protection Fund Currency Derivatives Segment Trust and the exchange would discontinue the current fixed charge of Rs 250 per month from September.
The exchange would levy advance transaction charges of Rs 50,000 per member per annum, which would be set off against actual transaction charges payable by the member in the respective financial year.
“Advance transaction charges on a pro rata, rounded off basis of Rs 30,000 per member shall be collected for the current financial year,” MCX-SX said in a circular today.
The NSE had said on August 12 that it would levy transaction charges of up to Rs 1.15 per lakh of the total turnover value in the currency derivatives segment.
Furthermore, the NSE would levy an advance transaction charge of Rs 50,000 per member per annum and would charge an admission fee of Rs 1 lakh from its existing members and Rs 5 lakh from others.
The NSE has also asked its members to contribute to its Investor Protection Fund Trust.