NSE launches alpha membership to counter MCX-SX

Written by fe Bureau | Mumbai | Updated: Sep 25 2012, 07:33am hrs
In the competition between the MCX Stock Exchange (MCX-SX) and the National Stock Exchange (NSE), it is the broker community that is coming up trumps. Market leader NSE has now tweaked its membership structure, which would drastically bring down the costs for a certain set of broker members.

The NSE has introduced a new category of membership called 'alpha' for those entities that primarily intend to trade only on a proprietary basis on behalf of themselves and their associate firms and family members. Such members will not offer broking services to the general public.

Interestingly, the NSE move comes close on the heels of MCX-SX announcing its own membership structure a few weeks ago. MCX-SX has kept its membership charges significantly lower than that of NSE that boasts of a 80% share in the cash market segment and a near-monopoly status in the equity derivatives (F&O) space.

MCX-SX has pegged the broker membership fee at R25 lakh. While the admission fee for both MCX-SX and the NSE is R5 lakh, the difference is clearly visible on the deposit requirement, which is R20 lakh for MCX-SX and R75 lakh for NSE. Further, a corporate membership at the NSE requires a deposit of R1.50 crore.

Meanwhile, according to a circular issued by NSE on Monday, the 'alpha' membership will require a deposit of only R20 lakh for cash segment and R25 lakh for F&O and there will be no admission fee. This is less than half of the R1.10 crore that the NSE charges for broker membership. The networth requirements have also been reduced by 50% to R50 lakh for the 'alpha' category.

The new membership, however, comes with a catch. Current members of the NSE who intend to switch to 'alpha' will not get an immediate refund of the excess deposit held with the exchange. Resulting surplus deposits with the exchange will be utilised to pay transaction and infrastructure charges over a period of three years, said the release. Brokers, on conditions of anonymity, say that such a move by the NSE was largely expected as the membership drive of MCX-SX has also begun.