Shares of Multi Commodity Exchange of India (MCX) surged by up to 8% on October 3, following the release of lenient-than-expected Futures and Options (F&O) norms by the Securities and Exchange Board of India (SEBI). This boost in the stock price has sparked increased interest among investors looking to invest in stocks in this sector.
SEBI unveiled six new regulations aimed at the F&O market, ranging from upfront premium collection to capping the weekly expiry of index derivatives. The market regulator's new rules, set to take effect between November 2024 and April 2025, are expected to bring gradual changes to the industry.
One of the most notable aspects of SEBI's announcement is the lower-than-expected increase in expiry-day margins, which is now set at 2%, a substantial reduction from the anticipated 8%. Additionally, SEBI has increased the lot size by 2 to 3 times instead of the previously proposed 3 to 4 times. These changes are seen as a positive for the exchange, driving higher investor interest for those aiming to invest in stocks like MCX.
Citi's analysis suggests that the impact on retail volumes will be gradual, forecasting a 35 percent reduction in index options premium turnover for NSE, the rival of BSE. Meanwhile, BSE is expected to see a decline of 15 to 20 percent in turnover, according to IIFL Securities.
The phased implementation of these norms over the next three to six months is expected to lead to a measured tightening in the market, according to Jefferies. However, this gradual rollout provides investors with a unique opportunity to invest in stocks like MCX, which has shown resilience in the face of changing market conditions.
At 10:34 am on October 3, MCX shares were trading over a percent higher at ₹5,889.35 on the National Stock Exchange (NSE), with the stock having surged 85% year-to-date. Over the past year, MCX shares have rallied over 200%, significantly outperforming Nifty's returns of 32% in the same period.
Shares of BSE Ltd also soared, hitting an all-time high of ₹4,200, as they gained 8% in early trade. BSE's stock has skyrocketed 91% so far in 2024, outpacing Nifty's 18% gain. The exchange has introduced higher transaction fees across various segments, effective from October 1, 2024, adding further momentum to its stock performance. These fees include a rise in charges for Sensex and Bankex options contracts to ₹3,250 per crore of premium turnover.
MCX has also revised its transaction charges for futures and options contracts, which is seen as a strategic move to enhance revenue. The consistent upward trend in these stocks presents a valuable opportunity for those looking to invest in stocks of exchanges with strong growth potential.
With favourable F&O norms and strategic business decisions, both MCX and BSE are poised for continued growth. The market's reaction to SEBI's announcements has reaffirmed the potential for these stocks to remain in focus for investors. For those looking to invest in stocks in the financial exchange sector, MCX's strong performance and the lenient regulatory updates offer an enticing prospect.
In conclusion, as SEBI's new F&O regulations roll out and exchanges adapt to the changing landscape, stocks like MCX are showing strong momentum. This favourable environment makes it an ideal time to invest in stocks, particularly in exchanges like MCX that have a proven track record of growth and resilience.
For android only