After a long hiatus, the Indian stock exchange landscape is witnessing a new era of competition. Early this year, MCX Stock Exchange (MCX-SX), a subsidiary of India's leading commodity bourse, the Multi Commodity Exchange (MCX), promoted by Financial Technologies, a prominent vendor of exchange trading solutions, announced plans to enter equities trading. The stock exchange has been operational since last year, starting out trading in currency futures. MCX-SX is now awaiting the go-ahead from India's capital markets regulator, the Securities and Exchange Board of India, to trade in equities. What is remarkable about this move is that MCX-SX is the first player in the past 15 years to venture into equities trading.
The last time a new exchange entered the fray was when the National Stock Exchange (NSE) was launched in the early 1990s. It challenged the hegemony of the then market leader, the 134-year-old Bombay Stock Exchange (BSE), and revolutionised the way trading was carried out in the country. Moving away from the open-outcry system practised at that time by the BSE and the 20 or so regional exchanges, NSE adopted an electronic order-matching system that provided it with a nationwide reach, away from the broker-dominated financial centre, Mumbai (formerly known as Bombay), the stronghold of the BSE. "The NSE did a remarkable job in transforming the market," says Ashvin Parekh, partner at Ernst & Young's global financial services unit. He says that NSE has brought about dramatic improvements in governance, not only in terms of technology, but in terms of transparency and risk management processes as well.
