Something Is Afoot At The Bombay Stock Exchange
If you have been following electronic trading in Asia and particularly in India you would have noticed all the activity of late coming out of the Bombay Stock Exchange (BSE). Since the beginning of this year they have changed pricing to a maker-taker model, launched co-location, added another clearing and settlement bank, entered into mobile trading, appointed a new chairman, appointed an executive from Deutsche Boerse to their board, engaged NYSE Technologies to manage their price feed infrastructure and are 15% owners of the newly launched United Stock Exchange (USE). What is going on?
The BSE is India’s oldest exchange, a product of colonial Britain, and has been fighting a losing battle for market share in India against its arch rival the National Stock Exchange (NSE) for quite sometime. Given the activity in the past 4 months, however, they look set to bring the battle to the NSE and wrest some of that market share back.
The appointments of Mr. S Ramadorai and Andreas Preuss to the board are strategic. Andreas brings his deep understanding of the competitive exchange business in Europe and Mr. S Ramadorai was the former CEO of Tata Consultancy Services the largest technology services company in India. Coupled with NYSE Technologies and Mr. S Ramadorai technological savvy the BSE is making a commitment to technology critical to any competitive electronic trading industry.
Granted colocation is nothing new in Asia but no other exchange in APAC applies maker taker pricing or offers mobile trading for that matter (OK Vietnam offers mobile but you get my point)
Perhaps one might say that India needs some consolidation and perhaps that might be true in its commodity markets but in this age of openness and competitive trading venues India’s equity markets may be further along than has been generally attributed to them. We all know regulations are still erroneous and bloated with bureaucracy but the kinds of activity we have been seeing there leads me to believe India’s electronic trading industry is Asia’s dark horse.