To increase its geographic footprint and fend off rising competition, the National Stock Exchange (NSE) is actively scouting for alliances with regional stock bourses.
Apart from Jaipur Stock Exchange (JSE), India’s premier stock exchange has signed a memorandum of understanding (MoU) with two more regional bourses — Madhya Pradesh Stock Exchange (MPSE) and Vadodara Stock Exchange (VSE), officials said on condition of anonymity. NSE’s agreements with these two exchanges were awaiting approval from the Securities and Exchange Board of India (Sebi), they said.
According to the terms of the agreement, which is similar to NSE’s tie-up with the Madras Stock Exchange (MSE) last November, companies listed on these two exchanges will be available for trading on NSE. Members of these regional stock bourses will also be able to trade in shares of companies listed on NSE.
NSE is also in talks with the Ahmedabad Stock Exchange (ASE) to form a similar alliance. According to an ASE official, the decision to tie up with NSE will be taken within a month.
An NSE spokesperson declined to comment on the issue.
At present, there are 18 Sebi-recognised regional stock exchanges in India. However, there is hardly any trading happening on these exchanges. The partnership with a national stock exchange like NSE is aimed to improve liquidity in stocks listed on these exchanges.
To keep its leading position intact, NSE, which has more than 70 per cent market share in the cash segment and nearly 100 per cent in the derivatives segment, is looking for alliances both in India and abroad.
In March this year, NSE entered into a cross-listing arrangement with CME Group and expanded its tie-up with the Singapore Exchange (SGX). The agreement with CME allows NSE to launch rupee-denominated futures contracts on Dow Jones Industrial Average and S&P 500 in India and the former to launch dollar-denominated Nifty futures contracts.
SGX, which already offers Nifty futures, plans to launch options on Nifty and derivative contracts on the CNX Nifty Junior, CNX 100 and CNX Midcap indices in this year.
