Soon there will be a fourth player in the currency futures trading and MMTC, one of India’s largest public sector trading agencies, has proposed to pick up to 15 per cent equity in that exchange.
To be known as United Stock Exchange of India (STOX), the new player is a special purpose vehicle (SPV) created by New Delhi-based Jaypee Capital Services for setting up the currency futures exchange. Jaypee Capital, formed by Jaypee Commodities, will be the single-largest shareholder in the proposed exchange.
The proposed exchange, it is learnt, will be set up with a networth of Rs 150 crore and 49 per cent equity in the bourse will be with the public sector. Apart from MMTC, other public sector firms that are likely to hold stake in the exchange include Bank of India, Bank of Baroda, Oriental Bank of Commerce, Indian Overseas Bank and Canara Bank.
Jaypee Capital will be the single-largest shareholder in the exchange. Other private companies to have stake in the new currency futures player include Federal Bank, TCS, STCI and Standard Chartered Bank.
MMTC today informed the Bombay Stock Exchange (BSE) that it “proposes to invest Rs 22.5 crore in United Stock Exchange of India, ensuring that MMTC’s total stake in that exchange doesn’t exceed 15 per cent of the total paid-up capital”.
Sources close to the development said “there is enough scope for one more exchange for currency futures and the new exchange will come with a unique selling point (USP).”
MMTC has also said in the note to BSE that “the forex market in India is expected to grow to a great extent and the proposed exchange is expected to get membership from corporate, commercial and co-operative banks, asset management companies and money transfer agents gradually”.
Sources said as per Sebi guidelines, the currency futures exchange has to have a minimum of 50 members and that was not difficult. At least 16-17 shareholders would become members, they added.
Trading on the new exchange is expected to begin by the end of January or latest by the end of the current financial year. MMTC is planning to hedge its own foreign currency exposure on the exchange.
P H Ravi Kumar, former CEO of commodity futures exchange NCDEX will be the CEO of the proposed exchange. The exchange is expecting in-principle approval from Sebi anytime soon.
Currency futures were first launched by the National Stock Exchange (NSE) on August 29, followed by MCX and the Bombay Stock Exchange (BSE).
