MUMBAI MCX-SX, India's new stock exchange, will begin trading of cash equities and equities derivatives on February 11, setting up what is expected to be intense competition with the country's two established bourses.
The upstart exchange has been gearing up to launch equities trading since last year and will compete against BSE Ltd and dominant player National Stock Exchange of India Ltd (NSE), each of which is preparing for initial public offerings to raise capital.
MCX-SX is likely to post muted volumes at first compared with the BSE and NSE, but its entry could lead to lower trading costs as the exchanges vie for market share.
Trading volumes overall look set to grow substantially in coming years as the Indian government pushes initiatives to bolster mutual fund and insurance investments in a bid to bring more retail investors into stock markets.
"I think there will be more competition between the exchanges and the kind of virtual monopolistic status of NSE would get reduced," said Paras Adenwala, chief investment officer of Capital Portfolio Advisors in Mumbai.
"Three exchanges would definitely increase the opportunities for traders multifold."
Equities and equity derivatives trading on MCX-SX will be officially inaugurated in a February 9 event to be attended by Finance Minister P. Chidambaram, the exchange said on Monday. Actual trading for investors will kick off two days later.
MCX-SX, controlled by commodity bourse Multi-Commodity Exchange of India Ltd (MCEI.NS) and trading software provider Financial Technologies (India) Ltd FITE.NS, won approval last year from Indian market regulators to start equities trading after a long regulatory process.
The new exchange has registered 270 trading members with Securities and Exchange Bank of India, which oversees stock markets, and will shortly cross the 350 target it had set for itself as a condition to officially start trading, it said in a statement.
MCX-SX did not say how many stocks would be available for trading from the first day. A spokesman declined to comment beyond the statement.
Equities trading is dominated by NSE in India, which has overtaken older BSE in trading volumes.
The total value of share trading in the NSE reached $526.1 billion last year, compared with $110.3 billion on the BSE, according to data from World Federation of Exchanges. But combined, that's only about a quarter of the $2.6 trillion traded in China's Shanghai stock exchange last year, according to the same data.
The government is keen to bring more retail investors into stock markets under economic reforms aimed in part at re-energising the mutual fund industry and luring investors away from gold. Last year the finance ministry unveiled the Rajiv Gandhi Equity Savings Scheme, providing tax incentives for first-time retail investors.
"In line with the regulator's vision, our focus will be to increase the depth of markets, introduce new segments and strengthen participation of investors from across the country," said Joseph Massey, MCX-SX chief executive, in the statement.
(Additional reporting by Abhishek Vishnoi; Editing by David Holmes)