Wednesday, 5 September 2012

MCX-SX membership to cost 15-80% less

MCX Stock Exchange (MCX-SX), which recently received regulatory approval to function as a full-fledged national exchange, has come out with an aggressively priced membership cost structure to attract new brokers.

Its limited-period membership offer, announced on Wednesday, is 15-80% cheaper than those offered by rivals BSE and the National Stock Exchange (NSE).

The offer, which runs till October 18, would involve net outlay (including admission fees and deposit) of Rs25 lakh for entry-level membership to cash and the futures and options (F&O) segments.
MCX trading tips has kept the admission fees at Rs5 lakh, the same as that at NSE.

However, its deposit requirement is just Rs10 lakh for each of the segments. The deposit requirement at NSE is Rs125 lakh and Rs25 lakh for the cash and F&O segments, respectively, while for BSE, the total deposit requirement including base minimum capital and trade guarantee fund is close to Rs30 lakh.
Experts see the move meeting its objective.

“The cost structure is in line with the current trend and should help it attract leading brokerages and build up volumes once it starts equity segment trading,” said Sudip Bandyopadhyay, MD and CEO, Destimoney Securities.

Jagannadham Thunuguntla, strategist & head of research at SMC Global Securities, said the offer was expected, after all the efforts that have gone into obtaining the equity segment licence. “MCX, being a promoter-driven entity, has more aggression and hunger to gain market presence. It has considerable base in the form of commodity trading members who may enroll in equities segment as well,” he said.
And it isn’t the cost structure alone that MCX-SX is using to attract members.

It has kept the networth requirement for members at Rs30 lakh, which is in line with what BSE stipulates for its members, but is less than the Rs75-100 lakh required by NSE.

The exchange has also introduced two special category of memberships --- professionally qualified member and rural entrepreneur member --- in order to increase its reach and attract brokers in rural and smaller districts with no capital market penetration.

The exchange would offer 10% discount on application fees to professionally qualified members and 20% discount to rural entrepreneurs starting broking business in 5,300-odd smaller subdistricts and talukas where there is no capital market penetration.

MCX-SX, in its press release, said the cost optimisation will free up huge capital for members and brokers that would otherwise be blocked in exchanges. “Brokers and members will now be able to utilise this fund towards client acquisition, training of staff and business expansion,” it said.

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