Riddhi Siddhi Bullion, a major gold dealer, has taken a five per cent stake in the United Stock Exchange (USE), which will go live with currency trading from tomorrow.
In a separate transaction, New Delhi-based Jaypee Capital is in talks with two large export houses to sell 10 per cent stake in USE. Prithviraj Kothari of Riddhi Siddhi Bullion confirmed the deal to Business Standard. Jaypee officials from Jaypee Capital said they were yet to conclude the deal.
USE will be the third exchange to trade currency futures on its platform after the National Stock Exchange (NSE) and MCX Stock Exchange (SX) started currency futures segment in 2008.
Kothari was allotted shares directly by USE. Jaypee, which held 15 per cent stake prior to this transaction, was under obligation to cut its holding to five per cent, in accordance with the Manner of Increasing and Maintaining Public Shareholding regulations stipulated by the Securities and Exchange Board of India.
Apart from USE, Kothari holds stake in the NSE and the Inter-Connected Stock Exchange and runs an over-the counter gold trading platform. He was the key member involved with Dubai Gold and Commodity Exchange, launched by Financial Technologies (FT), where rupee-denominated currency futures were traded for the first time.
USE, where the Bombay Stock Exchange holds 15 per cent stake, is a direct competitor to MCX SX, promoted by FT group.
Currently, both NSE and MCX SX are suffering losses in the currency segment as they have waived transaction fees, the chief source of income for any exchange, to attract volumes. Both generate a combined daily turnover of over Rs 20,000 crore on their currency platforms. The USE, too, may not impose any transaction fee to begin with, exchange officials informed.
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USE is banking on banks and exporters, the largest hedgers of currency, to gain volumes on its platform. Apart from 26 banks, which includes most public sector ones, MMTC and India Potash are USE shareholders, too.
USE will trade in all four currency pairs -- dollar-rupee, euro-rupee, yen-rupee and pound-rupee -- which are currently permitted to be traded in India. Globally, currency accounts for nearly 25 per cent of volumes of all the segments, including equity, commodity and interest rate futures.