S'pore Exchange may launch of BSE products

The Singapore Exchange (SGX), which bought a 5 per cent stake in the Bombay Stock Exchange (BSE) last year, is exploring a collaboration with the Indian bourse.

The Singapore bourse is planning to launch products that are based on BSE's equity indices on its trading platform to help foreign investors take a bet on the booming Indian stock market.

The Singapore bourse also expects more Indian companies to use its platform to raise funds through popular instruments such as global depository receipts (GDRs), real estate investment trusts (REITs) and its business trusts this year, according to Lawrence Wong, the executive vice-president and head of listings market at SGX.

"We are actively working with BSE to explore collaboration in areas relating to listings and product development. Announcements will be made once we reach an agreement," he said, over phone from Singapore.

SGX already has a derivatives instrument on the National Stock Exchange's Nifty. In November, it had reduced the SGX Nifty India Index Futures from $10 to $2 to attract more investors.

In November, BSE had entered into an agreement with the US Futures Exchange to launch dollar-denominated futures trading on the Sensex from February 22 to allow US investors to participate in Indian equity market directly for the first time.

Wong said he was very confident of several Indian companies to list on the exchange's platform this year.

"We position ourselves as an Asian gateway for companies seeking profiling and capital on an international platform. This is attested by the fact that more than one-thirds of SGX listings are foreign," he said.

As a part of the demutualisation plan, BSE had divested 51 per cent stake in the exchange to foreign and domestic institutions. Germany's Deutsche Borse had also picked up a 5 per cent stake in the Indian exchange.

Rules prohibit one entity from holding more than 5 per cent equity in an Indian stock exchange.

Wong said the exchange's strategy was to focus on sectoral specialisation, where Singapore has a competitive edge and critical mass such as the maritime and offshore sector.

In August 2007, Ascendas Business Trust, which raised funds through a listing on SGX, became the first Indian property trust on the exchange that hopes to ride on the dynamic growth prospects of India's business space markets.

Delhi-based property developers DLF and Unitech are also expected to raise nearly $5 billion through business trusts and REITs from SGX, according to reports.

REITs on SGX on an average give 4-5 per cent return to investors and hence an attractive option for Indian real estate companies, which are looking to expand aggressively in coming years.

Wong said a big attraction for REITs on SGX was that companies were allowed to issue units on a continuous basis to mobilise funds for their property-development plans.

Further, there is no fear of redemptions, as investors are allowed to exit by selling units through the stock exchange.

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NEW ALLIANCE

SGX already has a derivatives instrument on the National Stock Exchange's Nifty

Ascendas Business Trust is the first Indian property trust to list on SGX

DLF and Unitech are also expected to raise nearly $5 billion through business trusts and REITs from SGX