 "MCX-SX woos participants through incentive plans")
MCX-SX would launch equity trading from February 11. Earlier, it was involved in a legal battle with the regulator to secure permission for this.
Under the new scheme, MCX-SX would pay members Rs 999-1,00,000 under various slabs for registering clients on its platform. Incentives would be based on the number of unique clients registered.
MCX-SX members would also be paid Rs 100 for every client who trades in equity cash and derivatives. The exchange has allocated Rs 1 crore for disbursement under the scheme and further payments would be based on pro-rata basis. However, the schemes would be applicable only in February.
In the April-September period, the National Stock Exchange (NSE) drew 6,50,000 new participants on its platform; the BSE added 1.3 million participants in the April-December period. According to officials of both exchanges, the data are based on unique permanent account numbers (PAN) registered with these. PAN number registrations with NSE and BSE suggest of the 34 million taxpayers in the country (in 2011-12), 14 million are connected with each exchange, through 1,400-1,500 broking members registered with each exchange. This meant at least one in every three tax payers used the NSE and BSE platforms for exposure to the equity market, said an NSE official. Together, both exchanges have about 3,00,000 trading terminals across the country. The high statutory cost in cash equity has been a key reason for volumes shifting from this segment. To increase their retail participant base, the two exchanges are now focusing on small towns and cities.
Despite incentives, higher statutory costs make it difficult for brokers to generate high volumes. The majority of statutory costs are accounted for by transaction tax, stamp duty and service tax.
For their members, both BSE and NSE have various incentive programmes. After it secured permission to launch equity trading, to attract members, MCX-SX based its strategy on pricing. Its deposit net worth structure for membership is half that of market leader NSE. And, transaction charges on MCX-SX are 36-50 per cent lower than that of NSE. However, MCX-SX has positioned itself as a premium bourse by keeping its cost structure higher than BSE’s.
Stock brokers say MCX-SX has been showcasing its trading technology to members. They add it would unveil some of its new products in the coming days. MCX-SX claimed to have signed up 700 members. It would start equity trading with 300-350 members, as these were registered with the Securities and Exchange Board of India. MCX-SX’s entry into the equity segment would lead to a three-way battle between India’s top stock exchanges to gain supremacy in the segment.