United Stock Exchange of India,promoted by 11 banks,MMTC and brokerage firm Jaypee Capital,has received in-principal approval from the Securities and Exchange Board of India to start contracts in currency derivatives. This is the fourth currency exchange in the country after the ones promoted by the NSE,MCX and the BSE.
The exact shareholding pattern is still being worked out. Currently,Sebi norms do not allow one entity to hold more than five per cent equity. But a relaxation in this norm is granted for a short period and four entities,namely,Bank of India,Federal Bank,MMTC and Jaypee Capital would hold more than five per cent each to start with. The paid-up capital of the new exchange will be Rs 120 crore.
Bank of India CMD T S Narayanaswami said,The background of promoters places the exchange in an ideal position to build liquidity quickly and handhold smaller participants in benefiting from the exchange platforms. The new exchange is all set to launch trading operations in the next 10 weeks.
Trading in currency derivatives which started in August last year has been good with daily volumes now hitting the Rs 2,000-crore mark. NSE and MCX currency platforms are close by in terms of market share while the BSE has fallen way behind. National Multi Commodity Exchange is also planning to launch trading in this segment.
USEIL officials said a plethora of exchanges would result in competition but it would also help volumes grow. The market has outgrown our projection. We are expecting daily turnover of Rs 1,000 crore by March 2009. But it is already Rs 2,000 crore, they said.
Among the banks who are promoter shareholders in USEIL are Andhra Bank,Allahabad Bank,Bank of Baroda,Canara Bank,Federal Bank,Indian Overseas Bank,Oriental Bank of Commerce,Union Bank,United Bank of India and Bank of India. Federal Bank is leading the consortium.