Reliance, FTIL mull independent equity exchange

By SiliconIndia   |   Tuesday, 30 December 2008, 06:03 Hrs   |    3 Comments
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Mumbai: Reliance Money, controlled by the Anil Dhirubhai Ambani Group (ADAG), and Financial Technologies India (FTIL), which operates one of the world's largest exchange networks, are exploring the option of setting up their own equity exchange. This means that the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) are set to have some serious competition.

Since only five percent of Indian households invest in equities compared to the international average of up to 50 percent, both companies see enormous scope in this space, according to sources familiar with the developments.

The NSE enjoys a virtual monopoly in equity derivatives with daily average volumes at Rs 10,000 crore in the spot segment. In comparison, the BSE has daily average volume of just Rs 4,000 crore. The NSE's daily average volume in derivative segment is Rs 40,000 crore.
"We are not looking at the equity segment right now, but given an opportunity we will certainly look at setting up an exchange for small and medium enterprises," said Sudeep Bandyopadhyay, CEO, Reliance Money.
The FTIL group has interests in a currency futures exchange, commodity futures, power exchange and spot exchange for agricultural commodities and plans to set up an exchange for SMEs. It has set up exchanges overseas also.

"We are focusing on currency derivatives. All our initiatives in this segment are driven by innovation, information, education and research. We will continue to work hard and develop this segment and do not have any comments to make on the question at this point of time," said a spokesperson from FTIL, when asked about its plan for launching an exchange for equity trading.

Both aspirants will need Reserve Bank of India approval. For FTIL, the equity exchange would be an extension of MCX-SX, its currency trading exchange. Reliance Money will have to set up a new company.
Another issue could be equity holding. SEBI has recently decided to allow a single shareholder to hold a maximum of 15 percent in stock exchanges, but has not yet notified this. According to sources, the track record of the companies would be key in getting regulatory approvals.

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