MCX-SX tweaks transaction charges for currency futures trade

Faced with falling volumes and growing competition from rival BSE, MCX Stock Exchange has tweaked its transaction charges for futures contracts traded on its currency derivatives platform.

While there would be no change in a flat fee of Rs 1.05 per lakh of turnover in currency futures trade on both sides of transaction in contracts based on dollar-rupee currency pair, the exchange has decided to exempt 'passive side of transaction' from this charge in case of other currency pairs of rupee with euro, British pound and Japanese yen.

Accordingly, only 'active' side of transactions in non-dollar currency pairs now attract a transaction charge of Rs 1.05 per lakh of turnover.

The revised charges have come into effect from November 5, 2014, as per a circular from MCX Stock Exchange (MCX-SX).

Earlier, a flat charge was applicable across all currency pairs.

"It has been decided to revise transaction charges of currency futures contracts traded in currency derivatives segment of the exchange to enhance liquidity and make the segment more attractive to participants in the market," MCX-SX said in its circular.

The revision in charges by MCX-SX comes weeks ahead of rival BSE beginning to levy a fee for trading on its currency derivatives platform with effect from December 1. BSE has so exempted currency derivatives from any transaction charges.

BSE's market share has been rising consistently in the currency derivatives market over the recent months on the back of implementation of latest technology solutions, lower costs and faster trades.

As per capital markets regulator Sebi's latest monthly bulletin, the turnover of currency derivatives at BSE increased by 22.6 per cent to Rs 1,41,170 crore in September this year from Rs 1,15,127 crore in the previous month.

This assumes significance as BSE began currency derivatives trade in November 2013 itself and it has overtaken MCX-SX as the second largest exchange in this segment with a market share of about 30 per cent currently.

According to Sebi, monthly turnover of currency derivatives at NSE increased by 9 per cent to Rs 2,85,236 crore in September, from Rs 2,61,636 crore in August 2014, while that of MCX-SX fell by 8.6 per cent to Rs 57,590 crore in the same month.

The turnover at the fourth exchange USE in this segment also rose by 14.2 per cent to Rs 9,370 crore in September, over the previous month, making MCX-SX the only exchange to witness a decline.

While the turnover at BSE has almost doubled from Rs 72,000 crore in April this year, in case of MCX-SX it has marginally fallen from Rs 59,000 crore in the first month of 2014-15.

In case of the largest bourse NSE also, the turnover has risen considerably from Rs 1,55,000 crore in April 2014.