Indian investors could soon be able to place bets on the indices of other constituents of the Bric — Brazil, Russia, India and China — region, along with those of South Africa. Stock exchanges of the five Brics economies have formed an alliance that would see the benchmark indices of members getting cross-listed on one another’s platforms.
While the alliance would initially see introduction of derivatives on benchmark indices of member exchange platforms, innovative products to track the Brics exchanges would also be developed later. The third phase may include product developments and cooperation in additional asset classes and services.
According to a release, the initiative brings together the BM&FBOVESPA from Brazil, Micex from Russia (currently merging with RTS Exchange), Hong Kong Exchanges and Clearing Limited (HKEx) as the initial China representative and the Johannesburg Stock Exchange from South Africa. India's National Stock Exchange and the Bombay Stock Exchange have signed letters of support and will join the alliance after finalising outstanding requirements, said the release.
These seven exchanges, incidentally, represent a combined listed market capitalisation of $9.02 trillion, equity market trading value/month of $422 billion and a total of 9,481 listed companies. The initiative was announced at the annual general meeting of the World Federation of Exchanges in Johannesburg.
The release further added that the second phase will also include the development of products combining exposures to equity indices of all alliance partner exchanges.
"These products would then be cross listed and traded in local currencies," said Edemir Pinto, CEO of BM&F BOVESPA. "They will also allow investors to gain exposure to other emerging markets through a locally listed product."
The interest in the Brics economies is prompted by above-average growth predicted for these regions, as well as the rising consumer power generated by growing middle classes in each nation.
"The growth of this consumer class implies that demand will accelerate within these countries," said Ravi Narain, managing director, NSE.
In a similar context, BSE CEO Madhu Kannan said the alliance "will create avenues for Indian investors to diversify and expand into other emerging markets".
It will also provide unique opportunities to investors in other Brics nations to participate and contribute in India's growth, he added.
