The competition among the currency futures exchanges is expected to intensify further as the United Stock Exchange (USE), which has recently received the regulators? approval, is planning to start live trading from July 2010. Mock trading will commence from Tuesday (June 15). Currently, the exchange traded currency futures market is dominated by MCX?SX and the National Stock Exchange (NSE) which are having close to 54% and 46% market share, respectively.
?Though the exact date is not finalised, we are hoping to go live in a month,? said TS Narayanasami, MD & CEO of USE. The exchange received Sebi?s approval for launching currency futures trading in the first week of April this year. The Bombay Stock Exchange (BSE) has a 15% stake in USE that have 25 leading public and private sector banks and three corporate institutions as its promoter shareholders.
The USE is planning to commence operations with close to 200 entities as its trading members to begin with. While the exchange is currently undertaking a membership drive on a pan India basis, nearly 100 members have already registered with the exchange. Another 75?100 large participants have expressed interest to register themselves as trading members of the exchange, according to USE officials.
The NSE, at present, have over 600 trading members, while MCX?SX has close to 670 trading members. Narayanasami said that the exchange had received good response from market participants, especially from Jaipur, Ahmedabad, Surat, Rajkot and Kolkata in recent roadshows. ?Our aim is not to have maximum number of trading members, but to have quality players who can bring large volume to the exchange,? he said, adding that the exchange would wait till the total traded volume gets stabilised above a certain level before sharpening its focus on certain segments of the market.
MCX?SX, the current market leader, is unperturbed by the entry of new players in the currency futures segment. U Venkataraman, executive director of MCX?SX, feels that the entry of more players is good for the industry as it will help develop the market which is in its nascent stage. ?India needs more new generation exchanges to emerge as a mature market from east. The future of this industry is about moving away from monopoly to emergence of new asset classes, inclusive growth and world class service levels at optimum cost benefiting millions of investors,? he added.
Currently, NSE generates an average daily turnover of Rs 14,400 crore while MCX?SX?s an average daily turnover is close to Rs 20,550 crore.