Why Exchange Businesses Are in a Class of Their Own
The Sector - Financial Market Infrastructure India's Exchange Economy: MCX, IEX & CAMS Three platform monopolies quietly powering India's commodity, energy, and savings markets India's financial market infrastructure is one of the most ignored investment themes in the country. Unlike banks, NBFCs, or asset managers that take risk on their balance sheets, exchange and platform businesses work like toll booths. They sit at the center of huge transaction flows and earn a fee every time a trade happens, a mutual fund unit is redeemed, or electricity is traded. They do not take credit risk, need very little capital, and can grow easily as the markets around them expand. This sector stands out for three main reasons: Network effects : more buyers and sellers attract even more buyers and sellers, so the biggest exchange becomes the preferred place to trade Operating leverage : once the platform is built, it can handle much higher volumes with only a small increase in cost Stru...