The new MCX stock exchange (MCX-SX) intends to take on the country's two most popularly traded equity indices, the Sensex-30 and the Nifty-50, with its benchmark SX-40.
It will select top stocks from the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) to create the SX-40. The stock will be traded on MCX-SX when the exchange inaugurates multiple asset trading on its platform on Diwali.
The Sensex and Nifty are recognised globally, with the latter comprising exchange-traded funds (onshore and offshore), exchange-traded futures and options (at NSE, the Singapore Stock Exchange and Chicago Mercantile Exchange), other index funds and over-the-counter derivatives (mostly offshore). The Sensex is listed on the Eurex platform, one of Europe's largest derivative market places. Trading in both the Nifty and Sensex together generates a little over two-thirds of the volumes in India's equity derivative market.
MCX-SX is currently on a membership drive and is conducting road shows in different cities. It has been MCX-SX's strategy to position itself as a premium bourse, by keeping its pricing structure lower than NSE and higher than BSE. It has followed the same strategy with its index, by having 40 shares in it. This barometer index would comprise stocks based on liquidity and non-promoter market value, among other factors.
Joseph Massey, the managing director and chief executive officer of MCX-SX, said they’d collaborate with Indian Statistical Institute for its indices. It also had an international partnership with FTSE and its other Indian partner, Financial Technologies Knowledge Management Company, for developing benchmark domestic and global indices.
Massey added the SX-40 would be a free-float-based index of large market-cap and liquid stocks representing the most important sectors. Further details of the stocks forming part of the index and their weight, among others, would be announced by the exchange before the launch of its equity segment in mid-November.
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The exchange plans to appoint advisory boards, comprising members, investor associations, academic institutions, professional bodies and all other stakeholders of the capital market, in each state, for financial literacy, financial inclusion and identifying and resolving capital market-related issues. It will also have a national advisory board comprising members co-opted from state boards and including others operating at the national level.
The exchange is offering an entry-level membership fee and deposit at Rs 25 lakh, valid till October 18. Afterwards, it would be raised to Rs 50 lakh.
Massey said MCX-SX was looking at harnessing the latent potential of domestic savings and to reinforce it with institutional investment, domestic and foreign.