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Jignesh Shah, the vice chairman of MCX Stock Exchange Ltd., comments on plans to begin equities trading and developing bond markets. He made the comments in an e-mail.
MCX-SX conducted a test session on Nov. 19 to familiarize brokers with its trading platform. The bourse will begin stock trading when the number of members reach 350, it said in an e- mailed statement that day.
On attracting retail investors:
“Globally, retail investors grew on the strength of the bond markets, which are absent in India due to neglect of the existing exchanges. With MCX-SX coming, this will change.
‘‘It is made to believe by our exchanges that the work pertaining to capital market development is complete with a screen-based trading, a popular index and volumes in futures and options. Stock markets should first serve the needs of the economy in terms of capital formation, development of small and medium enterprises and promote bond markets.’’
On broking, transaction costs:
‘‘Indian exchanges levied a plethora of direct and indirect charges that caused a huge burden on broking houses, which paid up on fear of retribution. This will go now. We will have a completely transparent and dependable pricing policy.’’
On growth of algorithmic trading:
‘‘The issue here is not about good or bad. We can wait for assessment by global regulatory institutions on this, which is under way. The basic purpose and principle of technology is to provide level playing field whereas co-location and algorithmic trading differentiates between the big and small traders.
‘‘Aping technology models of the western exchanges does not serve priorities of a developing market like ours, where the fundamental focus of an exchange should not be restricted to just promoting delta trading.
‘‘Technology is meant to enhance the quality of market in terms of speed and integrity. It can lead to serious distrust of domestic and foreign investors if not handled properly.’’
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