India’s newest stock exchange, MCX Stock Exchange (MCX-SX), has gained regulatory approval to start trading new asset classes, pitting it against the country's two main exchanges for stock trading.
The Securities and Exchange Board of India (SEBI) has granted MCX-SX permission to deal in equities, equity futures, equity options, interest rate futures and wholesale debt, subject to a number of conditions.
The approval comes on the heels of a March decision by the Bombay High Court to force the hand of the Indian regulator to allow the upstart exchange to offer equities and equity derivatives, in addition to the currency futures it presently trades.
“This is indeed a huge development for the Indian capital market industry and will create a conducive environment for growth of all asset classes. We will continue with our efforts of systematic development of markets and the financial market ecosystem,” said Ashok Jha, chairman, MCX-SX.
Until now, most equities in the country have been traded on the Bombay Stock Exchange and its main rival, the National Stock Exchange, which trades around 80% of equity volumes.
“The new regulations have provided the much-needed level playing field. 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.
MCX-SX has been a market leader in the currency segment, witnessing a steady and significant growth in turnover and market share ever since its inception in 2008. The average daily turnover increased from Rs 355 crore (US$63.82 million) during its first month of operations to Rs 12,927.83 crore (US$2.32 billion) in June 2012.