USE corners 52% share on debut

First day’s turnover surpasses combined currency segment of NSE, MCX-SX.

The United Stock Exchange (USE), the country’s third currency bourse, made a big-bang debut on Monday, cornering a near 52 per cent market share in the currency derivatives segment. Till last week, the Financial Technologies-promoted MCX Stock Exchange (MCX-SX) was the dominant player in currency trading, followed closely by the National Stock Exchange (NSE).

On USE's first day of trade, the turnover crossed Rs 45,486 crore ($9.88 billion) to surpass the combined currency segment turnover of both NSE and MCX-SX, which stood at over Rs 42,000 crore. This was mainly due to banks, which generated heavy volumes on the exchange.

USE is promoted by 26 domestic banks, the Bombay Stock Exchange, Jaypee Capital, Riddhi Siddhi Bullion, MMTC and India Potash, among others. Sources said it were these shareholders who generated most volumes on Monday.

The open interest (OI) on USE, however, stood at a measly 0.07 per cent. USE executives pointed out OI would rise over time.

Talking to Business Standard, USE CMD T S Narayanasami said: "We expect that volumes will continue like this in the days to come. Of course, banks are highly active on USE. Also, we have witnessed a shift of trading activity from other exchanges.”

According to sources, 25 per cent trades came through the internet, while the rest were over leased lines. Trades through leased lines mainly indicate that volumes came from banks and large brokers, who trade directly with the exchange. Internet trades are mainly used by comparatively smaller players, like export houses and retailers.

The sources added that, among banks, Bank of India and Union Bank were the top traders, while New Delhi-based Jaypee Capital was another big trader among brokers. Riddhi Siddhi Bullion, too, was an active participant. Jaypee and Union Bank conducted the first trade on the exchange.

On USE, the dollar-rupee pair alone generated over Rs 44,994 crore in turnover. Other currency pairs, including rupee-euro, saw a turnover of over Rs 242 crore, rupee-yen over Rs 218 crore and rupee-pound over Rs 551 crore.

Comparatively, rupee-dollar contract was the top traded contract with a turnover of over Rs 20,000 crore on the NSE and MCX-SX.

When asked about a strategy to counter USE as trade volumes were shifting, an NSE spokesperson said the competition was welcome but refused to share any plans. "We welcome one more exchange," the spokesperson said.

Executives at MCX-SX refused to comment.