Will leverage our experience & expertise for development of Indian financial markets

Written by Kavitha Venkatraman | Updated: Mar 9 2010, 04:11am hrs
MCX Stock Exchange came into being in October 2008. Within 16 months of its operations, the new stock exchange has witnessed participation from about 500 cities and towns with 650 members. The average daily turnover of the exchange was at Rs 14,517 crore in January 2010. In an interview with FEs Kavitha Venkatraman, Joseph Massey, managing director and chief executive officer of the exchange, elaborates on the roadmap, market potential, etc. Excerpts:

It is over a year since the exchange has started its business. How has been the participation so far

We have received an overwhelming response from various market participants such as banks, importers, exporters, corporate houses and SMEs across India. We now have a strong base of over 650 members. We witness participation from close to 500 cities and towns across the country.

MCX-SX has achieved an enormous growth in average daily turnover and open interest within a year of its launch. The average daily turnover increased from Rs 355 crore in the first month of operations to Rs 14,617 crore in January 2010. During this period, we also managed to emerge as the No.1 exchange in the currency futures segment. The three new currency futures pairs euro-rupee, sterling pound-rupee and yen-rupee which went live on February 1 have also been witnessing a healthy participation.

Our tie-ups at the grassroots level with several export import associations such as Federation of Indian Export Organisations (Fieo, govt of India), TIE, Assocham, FISMI, and several other associations to provide training on currency futures have also paid off. Last year, we conducted one training programme every working day with several such associations and our members. This hand holding is a gesture of long-term partnership that has resulted in a broad-based participation we now have more number of trades for the same volume in other exchange.

What is the current market share in trading currency futures How have you planned the roadmap for future growth

MCX-SX is currently the market leader in the currency derivatives segment with market share in the range of 51 to 54%. Going ahead we will continue to leverage our groups global experience and expertise for development of the Indian financial markets. The group has implemented a unique market development model based on information, innovation, education and research across countries from the far east of Suez (Bahrain) to Asia

(Singapore) and we are confident that based on this model, MCX Stock Exchange will be Indias new generation stock exchange.

Currently, only 1.5% of the population is participating in the markets vis-a-vis 30-40% in developed countries. Moreover, our markets are witnessing liquidity concentration in top 100 scrips and 80% of the volumes come from top 10 metros. These indicate the growth potential of our markets. We believe that product innovation is the responsibility of an exchange and we are confident of accepting and meeting this responsibility. Development of bond markets, interest rate futures and SME exchange platforms are part of our future roadmap.

How do you propose to enhance market reach and access in securities market

The Indian financial markets will witness the growth which IT products witnessed from 1990 to 2000 and telecom from 2000 to 2010. Today, the country has over 500 million subscribers to telecom services. We have a vision of adding another 100 million investors. This financial inclusion is possible only via extensive efforts to spread financial literacy, product innovation and use of technology to bridge the urban-rural divide. Financial literacy will widen and deepen the investment cult of knowledgeable population beyond just equity as an asset class. Product innovation in multiple asset classes such as bonds, interest rate futures, equity and SME will truly bring about the much needed multi-fold capital formation and huge employment generation in India.

What is the present status of the stake sale process Is there any PE investment in the pipeline

We are committed to comply with divestment guidelines and will complete the process within the timeframe set by the regulators. Being a regulated entity and as a matter of policy we do not do selective disclosures and will come out with a formal announcement at an appropriate time.