MCX-SX gets equity license, finally

After a long time and after a long dispute with SEBI, the exchange which operates only in a limited part of the currency exchange space has got the permission from the securities regulator to operate in equities and other segments. Of course this is subject to various shareholding and voting caps imposed by SEBI since 2007 - which I have consistently argued are anti-competitive and logic defying (and unparelleled anywhere in the world). Anyways be that as it may, MCX-SX has agreed to the dilution of its promoters shareholding to 5% in one and a half years and dilution/sale of warrants issued to its promoters in 3 years. Further, the exchange can never exercise more than 5% voting rights. This is of course a great thing for competition which was sorely lacking in the equity and equity derivative space where (according to last year's SEBI annual report) NSE controlled 97% of the market with the balance 3% with the BSE. However, the true success of the new exchange will come not just from providing more competition but in helping re-create the nearly dead equity culture amongst the retail population and increasing the size of the pie. Let there be many more pies to bake.