London's GMEX to pick-up 5% stake in Metropolitan Stock Exchange

Mumbai: GMEX group, the London based exchange technology and products solution provider, is picking up a 5% stake in India's Metropolitan Stock Exchange (MSE) earlier known as the MCX SX.

GMEX is backed by Hirander Misra, the former chief operating officer and founder member of Chi-X Global an online trading venue that rose to challenge the legacy of age old equity trading platforms like the London Stock Exchange and the Deutsche Borse in Europe between 2007 to 2012.

"Both the GMEX and MSE have decided to join hands for product development and GMEX is also being offered a stake in our exchange as it is interested in becoming an equity partner too," said Udai Kumar, MD & CEO, MSE. "GMEX will have an option or a 36 month window to buy the 5% stake. The allotment will be done at a premium via preferential issue."

Kumar spoke to ET on the sidelines of a conference in Mumbai.

MSE is India's third national level equity and currency trading platform.
In terms of the daily average turnover, MSE had a market share of 3.5% in the currency derivatives segment for the financial year ended March 2017. But it has lost out to the National Stock Exchange (NSE) and BSE in equity segment.

"We have not given up on equity segment and will come back with new products," said Abhijit Chakraborty, chief operating officer, MSE.

MSE share has a face value of Re 1 as of now and an equity base of around Rs 250 crore. Known names on Dalal Street including Rakesh Jhunjhunwala, Radhakishan Damani, Amal Parikh, Kalparaj Dharamshi and Nemish Shah are among the top shareholders of the exchange.

"There is an opportunity in bringing new products on MSE platform as India has not seen innovative financial products in debt, equity and interest rate futures for many years now," said Misra. "Interest in buying stake is a testimony to our commitment of a partnership with the MSE."

GMEX also seeks to launch a pan-European derivatives platform and replicate the success of Chi-X, which had become the second largest equity trading platform in Europe before Misra left. In September 2012, Misra pulled out of negotiations to revive the dormant Delhi Stock Exchange (DSE). He had been in talks with the exchange for months to turn it into an electronic trading platform to compete against the NSE and the BSE but could not agree to terms after the Securities and Exchange Board of India introduced rules banning exchange heads from owning shares and proposed a cap on salaries of senior executives.

While cash market volumes in the equity segment in India is limping back after a lull since the 'great depression' of 2008, NSE's Nifty and Bank Nifty index are the only two widely traded derivative products found appealing by foreign investors. The exchange traded debt and interest rate future market in India is virtually non-existent.