India’s leading commodities Exchange group has finally received approval from the financial regulator to act as a full stock exchange. The market regulator Sebi today granted permission to MCX-SX to operate as a full-fledged stock exchange, a development that ends nearly four-year-long wait of the bourse and will bring in more competition in markets.
MCX Stock Exchange (MCX-SX) was first granted recognition by Sebi in September 2008, but it was allowed to conduct trading only in the currency derivatives segment.
With today’s approval, MCX-SX would be able to offer additional asset classes such as equity and equity F&O (Futures and Options), interest rate futures and wholesale debt segments.
The Indian rupee is currently trading at 55.38 agaisnt the greenback.
Welcoming the decision, MCX-SX Vice Chairman Jignesh Shah said: “We are thankful to the regulator and policy makers for effecting calibrated reforms that will foster a pro-competitive environment in India’s exchange industry.”
“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,” he added.
At present, Sebi has granted permanent recognition to eight stock exchanges in the country, but only two of them — BSE and NSE (National Stock Exchange) — are operating as active national level bourses across the segments.
MCX-SX and USE ( United Stock Exchange) are present in the currency derivatives trade only.
With Sebi’s latest decision, MCX-SX is likely to become the third major national-level full-fledged stock exchange.
The Securities and Exchange Board of India (Sebi) has been so far renewing MCX-SX’s license for one-year periods, but has not been allowing the exchange to operate in segments other than currency derivatives, saying the bourse was not compliant to the shareholdings and other regulations. Its last license was valid up to September 15, this year.
India’s currency INR is traded as an NDF due to capital controls, corporate clients were finding major hurdles when managing their currency exposure and the RBI along with NSE and MCX launched currency futures in 2008.
MCX-SX is one of three exchanges offering the exchange traded contracts and boasts some of the highest daily volumes.
International broker dealers including Alpari UK and Tradenext limited offer trading in MCX products in addition spot FX and CFD’s.