<div>Thin trading volumes, an irritably slow website and “linking problems” at the broker-end marred the gala opening week of MCX-SX, the country’s newest stock exchange. The exchange, which commenced trading on February 11, could only log volumes worth Rs 47.20 crore in the first week.<br /><br />MCX-SX has also not disclosed the ‘level’ of its flagship index SX – 40, starting rumours that the exchange is still not fully operational for regular, high-volume trading. According to sources, MCX-SX has not started disclosing the level of its flagship index as it has failed to attract trades in all the 40 ‘indexed’ stocks.<br /><br />MCX-SX officials did not give specific comments, but said, they hoped to attract volumes over a longer period of time through “innovation and re-inventing” itself. “Innovation is the only constant and also the reason behind the success of any industry, institution or brands. Exchanges are no exception. In the past, Sensex was a very popular index but later it was Nifty that created volumes,” said an MCX-SX spokesperson.<br /><br />In its bid to raise volumes, the exchange has decided to introduce ‘Liquidity Enhancement Scheme’ (LES) in its equity and equity derivatives segments with effect from March 6. As per the scheme, the market maker performing up to 90 per cent of their obligation during the month in 25 securities will be entitled to receive an additional incentive of Rs 21 lakh per month and in case he performs similarly in 40 securities, the member would be entitled to receive an additional incentive of Rs 50 lakhs per month. Also, all passive orders will entitle the member and even investor to receive about 50 per cent of the transaction cost received by the exchange from the active order.<br /><br />Brokers expect LES to be popular among jobbers and other intra-day traders. “Their incentive scheme is quite good… It will attract a lot of small-time brokers. Also, MCX-SX has done a smart thing by extending the facility to even passive orders. This may increase the number of quotes on the exchange,” the broker told BW on conditions of anonymity.<br /><br />According to market experts, MCX-SX is witnessing lukewarm response as they have not managed to formally list companies on the trading boards. As per exchange data, 1,116 companies have been admitted for trading under ‘permitted to trade’ category.<br /><br />“National Stock Exchange had 135 companies listed on it in its first year of its operations. However, it had another 543 companies under the ‘permitted’ to trade category. By 2005-06, NSE had over 1,069 listed firms and none under the permitted category. We intend to take much less time to start listing on our platform,” the exchange spokesperson said.<br /><br />“The exchange intends to approach companies after the formal inauguration,” MCX-SX chief executive Joseph Massey had told media prior to the formal launch.<br /><br />Apart from that, MCX-SX has only managed to empanel about 405 brokers at the time of launch. <br /><br />Most brokers BW spoke to are willing to “give more time” for the exchange to gain trading volumes and investor participation.<br /><br />“It is too early to pass a verdict on MCX-SX. They’ll be able to garner respectable market-share if they are able to innovate on the basis of product and technology,” said Motilal Oswal, CMD of Motilal Oswal Financial Services.<br /><br />As a direct impact, market-watchers expect the cost of transactions to come down once the third exchange becomes fully operational with significant volumes. “Investors will benefit in overall terms. The new exchange will push down trading costs,” Oswal said.<br /><br />MCX-SX vice-chairman Jignesh Shah has told the Press that they will not undercut the cost of competitors to bring in more volumes.<br /><br />“We are in a marathon and do not believe in sprint. It should not so happen that we register a world record turnover on day one and you have to search our presence from day two. We want to build a strong foundation and build ourselves on it,” Shah said in the post launch press conference on February 9.</div>
