United Stock Exchange plans to waive fees to lure users

United Stock Exchange (USE), the newly setup exchange for currency derivatives slated to start operations in mid-January, 2010, may waive the transaction fees initially to promote and develop the market.

“There would not be any transaction charges for sometime” said Gaurav Arora, MD of Jaypee Capital Services, which owns a little less than 15% in the upcoming exchange.
Bombay Stock Exchange (BSE), too, has a 15% stake in the upcoming exchange, which has roped in all 21 PSU banks, besides some private and foreign banks, and even corporates such as MMTC, TCS and Indian Potash as its shareholders.

“We have received approval from Sebi to start with currency futures. However, we are awaiting the final approval for the interest rate futures segment, for which we have received in-principle approval,” said Arora.

The new exchange will be using the BSE’s technology platform and backend functions of clearing and settlement. BSE will come out of the currency and interest rate futures segments where it did not attract many participants, leading to liquidity issues.

So what would be USE’s strategy to garner market share in currency derivatives where
MCX-SX and NSE have a near monopoly? “Every participant and shareholder would be a user. We have all the market participants, including national and foreign banks, to provide liquidity and have strong support from brokers. It will be a rocking start to currency futures,” said Arora.

“Exchange traded platform has great future and has been more successful than OTC market,” he added.