Metropolitan Stock Exchange’s revamp of its equity segment with a liquidity enhancement scheme and upgraded systems is being watched by the industry as it plans to increase competition with the NSE-BSE duopoly in the cash market currently.
Analysts believe that this along with the push from large brokers that have invested in the exchange can help the exchange in marking its presence.
Buying Liquidity
The exchange circular on January 8 had said it is launching a Liquidity Enhancement Scheme (LES) through the appointment of designated Market Makers in the equity segment with the objective of ensuring continuous two-way quotes in equity securities and improve market depth and narrow bid–ask spreads. This scheme will remain active till the end of June.
According to the circular, every designated market Maker shall be eligible for a monthly Incentive of Rs 40 lacs and will be exempt from exchange transaction charges for trades executed under the scheme.
InCred Money Team believes that is very essential because without having that level of depth & liquidity, the exchange would not be attractive to the participants. In addition, the team noted that the exchange has raised more than
Rs 1000 Crores in the last year from lot of investors including some big brokers (Groww and Zerodha). “Slowly we may be seeing that push from the broker side to have their clientele trade on the exchange,” they said and added that after the Sebi changed expiry norms for the two prominent exchanges and limited to two expiries, if MSE is able to get some innovative product, it may help their cause.
Early Data and Strategic Backing
According to exchange data, the total traded value was zero on January 8 compared to Rs 49,47,287 on February 5. The number of stocks traded has also increased to 12 from only Reliance on January 27. MSE circular has identified 130 liquid stocks eligible.
An analyst said that while it is going challenging for MSE but we’ll have to see how the liquidity enhancement scheme works out and how they are able to create that market making and create that depth. He added that NCDEX also has plans to get into the equity segment that will also hit the markets and come out with similar offerings on the equity side and on other sides.