Saurabh Sarkar joined MCX Stock Exchange (MCX-SX), the country's newest full-fledged bourse, as its managing director (MD) and chief executive officer (CEO) in February 2014. Mr Sarkar, former MD and CEO of United Stock Exchange of India, had earlier worked with global financial services giants like Credit Agricole, Standard Chartered Bank, Calyon and ANZ Grindlays Bank. His goal is to improve participation and volumes, of the renamed Metropolitan Stock Exchange of India Ltd (MSXI).
Moneylife (ML): Since MCX-SX is making a new beginning, what are your plans to improve participation from investors, mainly retail investors and increase volumes?
Saurabh Sarkar (SS): Yes, indeed, it is a new beginning. Our new name ‘Metropolitan Stock Exchange of India Ltd’ (MSXI) will soon come into use. With this, we will leave our past behind and will focus on building the business. The Exchange has created dedicated business development teams to focus on various segments of market participants, namely, member brokers, domestic banks / institutions and foreign portfolio investors, corporates and retail clients. We believe, this focused approach and continuous dialogue with market participants would help us to build sustainable business. Further, the Exchange is also working on certain products which will be new to Indian markets and investors will find them interesting to trade.
ML: Have you set any target in terms of volumes, or market share, for MCX-SX, over the next three years?
SS: We have set our internal targets from a long-term point of view and also decided our priorities. However, our immediate target would be to gain 15%-20% market share in the currency futures segment soon. Currently, we have around 10%. Further, recent announcements by the Reserve Bank of India (RBI) which has proposed higher exposure limits in exchange traded currency derivatives (ETCD), without having to establish underlying exposure up to $15 million in US$/INR per Exchange, and placed the aggregate at up to $5 million equivalent per exchange, would give us the much required boost. The extension of market timing up to 7.30pm will be another major advantage.
The Exchange is also enjoying rising volumes in the interest rate futures (IRF) segment over the past few weeks. RBI has also decided to permit stock exchanges to introduce cash-settled IRF contracts on 5-7-year and 13-15-year G-Secs. So, in the days to come, there will be a lot of activities in this segment too and the Exchange is well-poised to benefit.
ML: What is the membership base of MCX-SX at present? Do you think lower costs in the price-sensitive options segment would help you generate volumes or you would refrain from reducing prices?
SS: The Exchange has over 900 registered members. We have been receiving new membership applications too. We are really thankful to all our members who helped us in sailing through our difficult times. We would like to focus on bringing a lot of real users/ hedgers to our platform which will help in making our platform liquid and vibrant rather than getting into any price wars with competitors.
ML: You received approval from the Security and Exchange Board of India (SEBI) to launch fresh contracts in currency futures, currency options, interest rate futures and equity and index derivatives. Will you be launching any new product? If yes, do you have any timeline in mind?
SS: As I mentioned, we have a long-term plan in place. As you may be aware, currently, the Exchange is in the process of reaching out to its existing as well as new investors for fund infusion. This is expected to be completed soon. After this, we will start implementing our plans one by one. However, the groundwork related to our plans / strategies has already been initiated and market will soon hear new announcements from us.
ML: You would also require substantial funding for launching new products and making the Exchange run seamlessly. What are your requirements for funding and how you plan to raise it?
SS: We will soon have a preferential and /or rights issue to capitalise the Exchange.
ML: You have converted the original promoters, FTIL and MCX, as public shareholders. Will there be any change in your relations with them, like technology support from FTIL and using MCX as the brand name? Do you see a possibility for a new vendor for technology supply or a change in branding in the near future for MCX-SX?
SS: FTIL has already sold its shareholding and exited the Exchange. It continues to be our technology provider. MCX continues to be our shareholder. As far as the brand or name is concerned, we will soon unveil our new brand identity.