MCX-SX signs up 700 members, undecided on equity launch

The FT-promoted exchange claims number of members signed higher 'than any other exchange before going live'

Ahead of launching trading in multiple assets, MCX-SX has signed up 700 members across the country.

The Financial Technologies-promoted bourse had opted for significantly lower net-worth and deposit criteria for members, compared to market leader National Stock Exchange (NSE). The BSE and the NSE had launched operations with 318 members in 1875 and nearly 200 members in 1994, respectively.

Before the BSE and the NSE were de-mutualised in 2007, the high membership clause was a major entry barrier to becoming a stock broker in India. Currently, NSE has 1,500 broker members, while BSE accounts for about 1,000.

On Monday, MCX-SX claimed to have set a world record; it said the number of members signed was higher “than any other exchange before going live”.

However, despite the market expecting MCX-SX would be fully operational from Diwali, senior officials of the bourse said they were yet to set a launch date. They, however, added operations would be launched by the year-end. MCX-SX didn’t specify the number of applications backed by full subscription amounts and trading deposits. Also, it didn’t give the details of the applications it had sent to the Securities and Exchange Board of India for registration.

“We are overwhelmed with the response to our membership drive, as we have all-around subscription from foreign and domestic brokers. We expect at least 350 members would be registered before we launch equity trading,” said Joseph Massey, managing director and chief executive of MCX-SX.

Brokers had to spend Rs 25 lakh to become MCX-SX trading members in the equity cash and futures segments. They were also required to have a net worth of Rs 30 lakh. This was, however, an introductory offer, valid only till October 18, after which the deposit was doubled. After the exchange announced its membership drive on September 5, NSE responded by cutting its deposit and net worth criteria by up to 50 per cent for a class of brokers under the new ‘Alpha’ category, compared to earlier charges of Rs 75 lakh-Rs 1.5 crore. BSE’s charges are much lower compared to the other exchanges.

Jignesh Shah, promoter and vice-chairman of MCX-SX, said the bourse would start equities trading this year, adding the company’s board would soon meet to take a decision on the matter. “All the three exchanges in India would flourish and there is space for more to come,” he said, stressing MCX-SX would not only focus on developing the equity segment, but also bond and interest rate futures. Currently, MCX-SX competes with NSE in the currency derivatives segment.