Universal trading licences: Equity exchanges have advantage over commexes

Stock exchanges have many revenue streams, robust infra, several products. But commexes lack active clearing corporations, index products and only hedge funds are allowed as institutional investors

After allowing universal broking licences, the Securities and Exchange Board of India (Sebi) has now allowed setting up of universal exchanges – this means stock exchanges can now enter the commodity turf and commexes can also do stock exchange business like dealing in equity and forex. The market regulator has given exchanges three quarters to prepare for facing competition. However, there does not seem to be a level playing field – commodity exchanges are perhaps on a weaker wicket.

An industry official says: “MCX has better scope to first enter forex derivatives, as forex has a natural extension for commodities.