Liquidity scheme, brokers push may help MSE

Metropolitan Stock Exchange Eyes Competition with NSE-BSE Duopoly

The Metropolitan Stock Exchange (MSE) has unveiled a significant revamp of its equity segment, a move aimed at increasing competition with the National Stock Exchange (NSE) and BSE duopoly in the cash market.

Buying Liquidity: MSE's Latest Initiative

The exchange has launched a Liquidity Enhancement Scheme (LES) to ensure continuous two-way quotes in equity securities and improve market depth and narrow bid–ask spreads.

• The designated Market Makers will be eligible for a monthly Incentive of Rs 40 lacs.
• They will be exempt from exchange transaction charges for trades executed under the scheme.

According to InCred Money Team, the scheme is essential for the exchange to attract participants, as lack of depth and liquidity would make it unattractive.

Early Data Suggests Growth

As per the exchange data, the total traded value has increased from zero on January 8 to Rs 49,47,287 on February 5.

• The number of stocks traded has increased from only Reliance on January 27 to 12.
• The MSE circular has identified 130 liquid stocks eligible for the scheme.

The push from large brokers, including Groww and Zerodha, who have invested in the exchange, may also contribute to the exchange's growth.

Strategic Backing and Innovation

The exchange's ability to innovate and offer new products, following the Sebi's change in expiry norms for the two prominent exchanges, may help its cause.

MSE's Revamp: A Game Changer?

Only time will tell if the MSE's revamp will indeed be a game changer and increase competition with the NSE-BSE duopoly.