The latest national exchange MCX-SX has not managed to gain a market share of even one per cent in terms of turnover in one month of its existence.
The exchange was launched on February 9 by Finance Minister P. Chidambaram and went live from February 11.
The average daily turnover of MCX-SX since its inception stands at Rs 99.52 lakh in the cash segment and Rs 81.27 crore in the F&O segment.
Long way to go
The turnover improved in recent times after the exchange introduced a liquidity enhancement scheme to incentivise brokers and members with attractive cost reductions and benefits.
This is in no way near the BSE, whose average turnover stood at Rs 2,002 crore in the cash segment and Rs 11,578.83 crore in F&O and the NSE’s turnover of Rs 11,064 and Rs 1.34 lakh crore respectively.
However, unfazed by the numbers, CEO and MD, Joseph Massey, is confident that things will get better with time as market infrastructure ecosystem evolves and members realise the value offered by participating in the new exchange.
“We feel over time, market participants will realise the cost and other benefits of the new exchange and see economic value in switching to it even after the liquidity enhancement scheme is over. We are quite satisfied with the exchange’s performance so far and see no need to worry,” said Massey.
Officials from the rival exchanges, however, believe that despite the marketing blitzkrieg unleashed by the MCX-SX, it has failed to deliver on a number of counts including product differentiation or a sustainable plan to build liquidity beyond the Liquidity Enhancement Programme. “Launching at a time when the markets are not doing that well and everyone is cost conscious was a pitfall that resulted in anti-climax,” said a senior official from a rival exchange requesting anonymity.
“We have taken a membership of MCX-SX but are still awaiting volumes to pick up in the new exchange before beginning trading on it. Unless the MCX-SX offers something extraordinarily new, there would be inertia and reluctance among brokers to switch to the new exchange. We will continue to wait and watch till then,” said Suresh Parmar, Associate Vice-President, Institutional Equity, KJMC Capital Market Services.
Too early to comment
Massey said: “We are monitoring the market feedback to our exchange and based on that we would be fine-tuning our features in the future.”
Some market watchers, however, stated that it was too early to comment on the performance of the new exchange after a period of one month.
Chairman of the Federation of Indian Stock Exchanges, B.K. Sabharwal said: “If we look back at the history of BSE and NSE, it takes time for any exchange to settle down and get requisite volumes. The new exchange should be able to catch up slowly and steadily.
“Once STT reduction comes into effect, people will find arbitrage opportunities available between the various exchanges, and volumes would get a boost on all the exchanges making it a win-win situation. Moreover, with the new financial year beginning from April 1, small- and mid-size brokers who have been fence-sitting to avoid cumbersome process of additional inspection and audits will also begin trading on the MCX-SX enhancing their volumes further.”