How do you start your own stock exchange?

Question

How do you start your own stock exchange?

nomi king 5 months 1 Answer 100 views

Answer ( 1 )

  1. Exchanges are considered core market infrastructure and are the main pillars of modern day capitalism. It takes a lot of financial resources, compliance standards, multiple ownership entities (Shareholding structure has to be diversified), boards, committees and a range of experts who are capable of pulling off such an operation. So far, only the National Stock Exchange (NSE) has done it so successfully and has gained a near monopoly market share in the Indian stock markets. Many others have come and gone before the millennium. There were a total of 23 stock exchanges including BSE but all died down except BSE. These regional stock exchanges could not compete on a pan India scale and failed when volumes started to consolidate in BSE and the newly formed NSE. Many of the regional exchanges were merged into BSE. This is one of the reasons BSE has so many listed stocks.

    Anyways, the eligibility criteria to start an exchange is beyond reach to almost all the non-financial institutions. Even Jignesh Shah of the erstwhile Financial Technologies (Currently known as 63 Moons Technologies) could not succeed in establishing a stock exchange. After successfully launching MCX, DGCX and many other exchanges in Africa, he wanted to setup a stock exchange to take up the might of NSE. But he was not given a license so hence, it failed. Right now, Metrolopolitan Stock Exchange is the new one on the block. Track them if you want to know how to go about this business.

    World over, the exchange business has been a winner takes all market. This is the case with any other market place business model. The market which has the highest number of buyers and sellers will prevail. For instance, BSE failed in the futures & options segment purely because NSE already had a near monopoly so BSE couldn’t get enough volumes to sustain the segment.

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