(Corrects day of the week in 1st paragraph to Thursday from
By Rafael Nam and Abhishek Vishnoi
MUMBAI Feb 7 India's new stock exchange MCX-SX
said on Thursday it will launch equities trading on Monday in
1,116 listed companies as the bourse operator looks to compete
aggressively against the country's two established players.
The number of available counters announced by MCX-SX in a
statement is about two-thirds of the 1,665 offered by dominant
player National Stock Exchange and a fraction of the 5,191 in
the older BSE Ltd as of the end of December, according to data
from World Federation of Exchanges.
However, these numbers include thousands of illiquid stocks,
making it a far less important barometer for traders, most of
whom welcome MCX-SX entry as trading costs are expected to fall
as the three exchange compete for market share.
Whether MCX-SX can succeed in a country where the value of
shares traded remain a fraction of those in the Shanghai Stock
Exchange will depend mainly on how successfully the bourse can
attract liquidity, especially from established brokers.
"Liquidity is going to be a challenge for MCX and they will
have to act to get market makers initially for most
instruments," said Abhay Jain, equity advisor at SSJ Finance and
Securities in Mumbai.
MCX-SX, controlled by commodity bourse Multi-Commodity
Exchange of India Ltd and trading software provider
Financial Technologies (India) Ltd, will start trading
operations on Monday after a long regulatory approval process.
Equities trading is dominated by NSE in India, which has
overtaken older BSE in trading volumes.
The total value of share trading in the NSE reached $526.1
billion last year, compared with $110.3 billion on the BSE,
according to data from World Federation of Exchanges.
But combined that's only about a quarter of the $2.6
trillion traded in China's Shanghai stock exchange last year,
according to the same data.
MCX-SX is betting trading volumes will grow substantially in
coming years as the Indian government pushes initiatives to
bolster mutual fund and insurance investments in a bid to bring
more retail investors into stock markets.
That is looking like an uncertain bet so far. Net outflows
from equity-focused funds reached 108.16 billion rupees ($2.03
billion) last year according to data from the Association of
Mutual Funds in India.
Those redemptions have come as investors have cashed in the
more than 20 percent gains in the NSE and BSE's benchmark
indexes last year.
"It may be successful with new breed of professionals
initially," said G. Chokkalingam, chief investment officer at
Centrum Wealth Management in Mumbai.
"But in the long run they need to tap successful, higher end
($1 = 53.2300 Indian rupees)
(Editing by Kim Coghill)