The BRICS Securities and Derivatives Markets - Hong Kong ...

The BRICS Securities and Derivatives Markets4. INDIAThere are over 20 stock exchanges and over 20 commodity exchanges in India. Among thestock exchanges, the National Stock Exchange of India (NSE) and BSE Limited (BSE) arethe most prominent. These two exchanges offer trading in stocks, ETFs, bonds and financialderivatives. The commodity exchanges offer trading in commodity futures while trading incommodity options is still prohibited. Among them, Multi Commodity Exchange of India(MCX), which became India’s first exchange to get listed on the BSE in March 2012, has thelion’s share by trading volume.The principal regulator in the Indian securities market (in legislative terms, “securities”includes financial derivatives) is the Securities Board of India (SEBI). It regulates stockexchanges, market intermediaries and other service providers and their activities, andpromotes investor education and training of market intermediaries. The market for domesticgovernment securities (G-secs), which are traded both OTC and on exchange, is developedand managed by the Reserve Bank of India (RBI), the nation’s central bank. It also issuesG-secs on behalf of the Indian Government.At the policy level, the Ministry of Finance (MOF) is responsible for formulating polices andadministering the relevant Acts for the regulation and development of the securities market;and the Ministry of Corporate Affairs (MCA) is primarily responsible for administering theActs governing the corporate sector.4.1 Key exchangesThe NSE and the BSE are the most prominent stock exchanges in India — almost all cashmarket trading (equities and other securities, excluding financial derivatives) is done on thetwo exchanges, with the NSE having the lion’s share (81% in 2011/12 6 ). These twoexchanges are also the only exchanges in India offering equity derivatives, in which tradingvolume is also dominated by the NSE (97%). Currently, only the NSE, MCX StockExchange (MCX-SX) and the United Stock Exchange of India (USE) offer currencyderivatives, in which the NSE has again the largest share by trading volume (47% in 2011/12),followed by MCX-SX (37%). (See Figure 4-1.)The NSE offers the trading of shares, warrants, mutual funds (including ETFs), fixed incomesecurities (include G-sec), futures and options contracts on equities, equity indices andcurrencies, and interest rate futures. The National Securities Clearing Corporation Limited(NSCCL), the NSE’s wholly-owned subsidiary, clears and settles the transactions of equityand financial derivatives.The BSE’s product offering is similar to the NSE’s except that the BSE does not offer tradingof interest rate futures and has suspended the trading of currency futures since April 2010.BOI Shareholding Limited (BOISL, 49% owned by the BSE) is the BSE’s clearing house forfunds and securities while Indian Clearing Corporation Limited (ICCL), the BSE’ssubsidiary, provides clearing and settlement services for the BSE’s mutual funds andcorporate debt segments.6The financial year in India is from April to March the following year (the same convention is used for thisIndia section of the article).- 13 - Research & Corporate Development, HKEx31 December 2012