MCX-SX gets India stock exchange licence India's market regulator has granted MCX-Stock Exchange India's third stock exchange licence, setting up a showdown with the nation's two existing bourses. The Securities and Exchange Board of India approval will allow MCX-SX to expand beyond the currency futures it currently offers to equity, equity futures and options, interest rate futures and wholesale debt segments, according to a company statement released late on Tuesday. The arrival of a third player in share trading opens up the prospect of fragmentation of share markets in India for the first time, following a trend that has swept the US, Europe and more recently Japan and Australia. Ashok Jha, MCX-SX chairman, said: "This is indeed a huge development for the Indian capital market industry and will create a conducive environment for growth of all asset classes." Nischal Maheshwari, head of research at Edelweiss, agreed that it could be a big step for Indian equity markets - but that it would take time for the exchange to build a successful operation amid competition from the market-dominant National Stock Exchange and the smaller and older Bombay Stock Exchange. Is the writing on the wall for NSE? No, I don't think so - I think NSE is pretty large, well-entrenched and has 60-70 per cent of the volumes so they will give it a tough fight," Mr Maheshwari said. I think [MCX-SX] will definitely be a player; now, what we need to see is if three players can survive in this industry. While gaining members and convincing companies to list will not be easy, MCX-SX has advantages because of its parent companies, says Sharan Lillaney, analyst at Angel Broking. Multi Commodity Exchange of India, one of the parent companies, controls 87.3 per cent of the Indian commodities futures industry by value of contracts traded, meaning it has established customers using its terminals. Financial Technologies, the second, provides the sort of technology bourses need to operate such as exchange and trading platforms. Shares in MCX - the company whose IPO earlier this year was 53 times oversubscribed - were up as much as 5.2 per cent on Wednesday before closing down 2.4 per cent, while parent company Financial Technologies was up as much as 7.7 per cent before closing up 3.1 per cent. Both companies will have to comply with new Sebi regulations on listed exchanges, including reducing their combined stake from 10 per cent to 5 per cent within 18 months. Sebi rejected the exchange's previous application, in September 2010, alleging dishonesty on the part of the company and setting of a legal battle. In April, the Supreme Court directed Sebi to amend its regulations for listed exchanges and reconsider MCX-SX's application. The company said it had "become eligible as per the new rules [recently established by Sebi]."