While MCX Stock Exchange (MCX-SX) has launched an aggressive membership drive, its arch rival, the National Stock Exchange (NSE), has decided to take competition from new bourse head on. The country’s largest derivative bourse has doled out goodies for its member brokers and will also offer innovative products for retail and high net-worth investors.
To counter MCX-SX’s reduction in deposit and net worth requirement, NSE will send dealers in brokerage houses to a trip to Singapore and will also give them bank credit if they win a quiz competition being organised by the bourse. NSE says 100 participants from each region— Mumbai, Delhi, Kolkata, Hyderabad, Chennai and Ahmedabad — will qualify to the regional round and winners in that level to the national round.
“The all India dealers quiz by NSE is an attempt at bonding with the dealers and appreciating the critical role they play, because they are the first point of contact for retail investors,” said Ravi Varanasi, head of business development at NSE. “It has been designed in a unique way to ensure the widest possible participation, till the very end of the quiz."
NSE plans to widen its range of fixed-income products, which include government and company debt, to attract the so-called retail investors, Varanasi said in an interview on September 6 in Mumbai. NSE is awaiting regulatory approval to offer futures on India VIX, which gauges investor expectation for near-term market swings.
“Retail services for both equity and fixed income, and high-end derivative products are areas of future growth,” Varanasi said. “We have multiple products at various stages of development in the pipeline.”
NSE controls more than 90 percent of the nation’s $28-billion (Rs 1.55 lakh crore) equity derivatives market and handles 75 per cent of the stock trades. Competition is poised to intensify from November when MCX-SX begins trading (Nifty) equities.
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MCX-SX had a 44 percent share of the currency-futures market in the year ended March, compared with NSE’s 39 percent. One of its founders, the Multi Commodity Exchange of India Ltd (MCX), was the world’s third-largest commodity-futures platform by volume last year, according to an MCX factsheet.
“NSE is facing a serious and credible challenge for the first time in its existence,” U R Bhat, managing director of Dalton Capital Advisors India in Mumbai, said in a telephone interview on September 6. “It should act now instead of resting on its leadership position, which can fade away very fast.”
NSE’s plan to offer more fixed-income products is a move to appeal to a relatively untapped market of risk-averse individual investors, Varanasi said. Indian households had financial savings of Rs 9.7 lakh crore in 2011-2012, about half of which were invested as deposits with commercial banks, central bank data show.
“Fixed income is an area of significant possibility,” Varanasi said. “India doesn’t have a properly developed fixed- income market for retail investors.”