From being a top player in the equity segment, the National Stock Exchange (NSE) has taken a lead in currency derivatives, too. After a near-three-year tug of war for a higher market share with MCX-SX, NSE recorded notably higher volumes on its platform compared with that of its rival in the past couple of months.
Based on the average daily trading volumes, NSE’s market share in the currency futures segment stood at around 58-59 per cent in December so far compared with MCX-SX’s 39-40 per cent. The United Stock Exchange (USE), in which BSE holds 15 per cent stake, has two per cent market share. Average daily trading volume for currency futures on NSE stood at around Rs 16,900 crore and Rs 11,500 crore on MCX-SX.
Both NSE and MCX-SX were neck-on-neck in the currency futures segment at the start of 2012. NSE had around 50-51 per cent market share while MCX-SX managed a comfortable 48-49 per cent. The market share of MCX-SX witnessed a fall since June when it was around 47 per cent. Only the currency futures segment is being compared here as NSE launched options trading many months ahead of MCX-SX, which had to wait for regulatory approval for the segment due to a pending court case. NSE has a near-64 per cent market share if one considers currency futures and options segment combined.
| TOP OF THE TABLE Market share of currency futures (%) | |||
| 2012 | MCX | NSE | USE |
| Jan | 47.86 | 50.93 | 1.21 |
| Feb | 48.68 | 50.18 | 1.13 |
| Mar | 53.31 | 45.51 | 1.18 |
| Apr | 50.19 | 49.61 | 0.20 |
| May | 50.09 | 49.72 | 0.18 |
| Jun | 47.59 | 52.21 | 0.20 |
| Jul | 46.88 | 52.86 | 0.27 |
| Aug | 45.50 | 54.25 | 0.25 |
| Sep | 45.41 | 54.34 | 0.26 |
| Oct | 42.68 | 56.87 | 0.45 |
| Nov | 42.82 | 56.87 | 0.31 |
| Dec | 39.85 | 58.10 | 2.05 |
| Source: BS Research Bureau | |||
Market analysts are keeping a track of trading volumes on both MCX-SX and NSE as the former exchange will soon launch equity trading on its platform. MCX-SX is being considered a threat to NSE due to the aggression that the group showed to become a market leader in the commodity derivatives segment. Around 85 per cent of trading commodity volumes in India are on the Multi Commodity Exchange, along with the Financial Technologies group-prompted MCX-SX. NSE-promoted National Commodity and Derivatives Exchange (NCDEX) is at the second position in terms of market share in the commodities segment.
An email response from MCX-SX said, "An exchange serves a purpose of providing the right financial infrastructure for a vibrant capital market. Sensationalising or analysing a drop in market share over a short period would be an incorrect reflection of developments. As an exchange, we focus on delivering the best technology, flawless execution, optimum cost and world class risk management. The turnover over a period of time would reflect the superior service standards."
"However, for your specific observation, we would like to highlight the fact that the primary difference in volume amongst exchanges is arising out of the difference in the volume of currency options segment which is recently introduced on our exchange. Volumes in currency options have been at par with competition if compared with their volumes during the launch phase and that too, without any transaction charges at that point in time. Also, any new launch usually takes time to stabilise and then improve over a period of time. We are sure your observation would also capture a miraculous spurt in volumes of currency derivatives on other exchanges within a month of our permission to offer currency options. What makes it more noticeable is this miraculous spurt occurred after a prolonged period of stagnant volume in an environment where fundamentals or volatility have not witnessed much changes.”
