India’s newest stock exchange got off to a modest start as it battles against giants NSE & BSE. The stock exchange which undertook a tough time getting approval started live trading today and got off to a reasonable start, a total of INR 69,00,000 ($127,000) was traded in 11,941 equities (as per the exchanges website).
India has been slow to liberalise its economy post partition (1947), the country underwent major economic reforms in the early 90’s and thus far has seen remarkable economic growth. NSE, the country’s largest exchange was set up by the government in 1992 to enhance competition and accessibility in the primary and secondary markets. The Bombay Stock Exchange is the country’s oldest exchange, set up in 1875, it is regarded as Asia’s oldest exchange.
MCX-SX which is part of the FT Group, promoted by Jignesh Shah, faced an uphill struggle getting its approval. The firm’s application was rejected by state regulator SEBI in 2010. SEBI rejected MCX-SX’s application saying that the exchange’s promoters did not adhere to the prescribed shareholding structure as the two promoters were found to be persons acting in concert.
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MCX-SX appealed to the high court in Mumbai and after much discussion in the courts of law the appeal was heard and SEBI was asked to review the application again. SEBI gave MCX-SX an early new year gift on December 20th 2012 as they officially granted the exchange a certificate that allows equities trading.
With only 20 million retail participants in the Indian stock market there is substantial growth opportunities for the exchange to operate in. In the UK around 10% of the population hold investments in equities and a much higher figure in the US. As indian investors become more sophisticated and financially literate, the stock market will be a viable alternative to traditional investments which include property and the yellow metal.
MCX offers trading via an online terminal and offers investors 1,116 listed companies this can be compared with rivals NSE who list 1,665 firms and 5,191 companies listed on the BSE. The total value of share trading on the NSE was $526.1 billion last year, compared with $110.3 billion on the BSE.
MCX-SX has a long way to go before it is seen as a real threat, however looking at the groups success on the commodity front the NSE and BSE will be watching over their shoulder.