Mumbai, Sept. 5: The stock market newbie — MCX Stock Exchange — is dangling an enticing offer of a stockbroker licence for just Rs 25 lakh.
The introductory membership offer is open till October 18 after which the fee will rise to Rs 50 lakh.
The initial offer comprises an admission fee of Rs 5 lakh and a deposit of Rs 20 lakh. It also sets a net worth criteria of Rs 30 lakh for the applicant.
MCX Stock Exchange Ltd is looking to drum up a new breed of stockbrokers by offering membership to a band of professionally qualified members, looking beyond the capital market’s ecosystem of investment bankers, private equity players, venture capitalists and stockbrokers. It is hoping to lure lawyers, MBAs, engineers, chartered and cost accountants and even doctors to apply for membership.
The stock exchange will also offer composite membership to foreign institutional investors and domestic financial institutions that will trade in equity, equity futures and options, interest rate derivatives and debt segments. The exchange is hoping to start operations by the end of this calendar year.
The MCX stockbroking card is a steal if you compare it with the cost of an NSE card of Rs 80 lakh for an individual or a partnership firm, and marginally cheaper than the BSE’s membership cost of Rs 30 lakh. Moreover, MCX-SX will provide comprehensive training, covering all asset classes and market segments for a staff of professionally qualified members.
It will also offer sponsorship for one of their directors/employees each year for two years to study MBA in finance from Indira Gandhi National Open University and special guidance for regulatory compliance and investor protection, besides a 10 per cent discount when they are ready to gravitate to a composite membership.
While announcing the launch of its membership drive today, MCX Stock Exchange couldn’t resist taking a sideswipe at its big rival by calling the NSE a “club of the rich”.
“The NSE charges a whopping Rs 1.5 crore for new corporate membership. The total cost of its membership runs up to Rs 2.5 crore (including a Rs 1-crore net worth that corporate members have to maintain at all times) — which is 400 per cent more than what members have to dole out at BSE and MCX-SX,” it said.
The bourse claimed its pricing structure necessitated a hard look at “why membership costs at the other two national exchanges, the NSE and the BSE, especially the former, have been so exorbitantly high over the years.” The BSE has lowered its costs over the past two years.
The rivalry between the NSE and MCX has escalated in recent years after the commodity exchange tried to break into the arena for stock exchanges. MCX believes it was unfairly forced to wait for approvals from market regulator Sebi because of a slander campaign unleashed by people apparently close to the NSE and a strict shareholding structure that the promoters of the bourse still have to comply with. MCX and Financial Technologies India Ltd — the Indian promoters — have to bring down their combined stake to 5 per cent from 10 per cent at present within a timeframe of 18 months.
The NSE has denied the accusations but the acrimony between the promoters and the top officials of the two bourses hasn’t dissipated.
MCX-SX is also looking to push the agenda of financial inclusion — the buzzword favoured by politicians and central bankers — by creating a category of rural entrepreneur members who will be located in 5,924 sub-districts and talukas “beyond the existing 2,000 cities and towns where the capital market access is currently not available”.
It said market participation and liquidity was currently limited to less than 2 per cent of the population, top metros and just over 100 scrips.