India Should Allow Exchanges to List on Own Platform, NSE Chairman Says

India should revisit rules that prevent stock exchanges from listing shares on their own platforms as the country’s capital-market ecosystem develops, National Stock Exchange Chairman Srinivas Injeti said on Friday. 

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The comments came a day after NSE made its stock-market debut on rival BSE at a valuation of about $47 billion. 

Under India’s existing framework, an exchange cannot list its shares on the platform it operates. The country’s market regulator considered allowing self-listing in 2015 but decided against it because of potential conflicts of interest. As a result, shares of an exchange must trade on a rival bourse. 

The practice differs from several major international markets where self-listing is permitted. In the United States, for instance, Intercontinental Exchange, the parent company of the New York Stock Exchange, is itself listed and traded on the NYSE. 

NSE holds dominant share of Indian trading 

NSE accounts for around 93% of India’s cash-market trading and nearly 75% of options trading. 

Its public-market debut comes at a time when derivatives activity has been affected by regulatory tightening and changes to trading rules. 

NSE Chief Executive Ashish Chauhan indicated that much of the decline in volumes associated with the regulatory changes and initial issues surrounding the closing auction session had already taken place. 

Trading volumes, however, remain substantial and are spread across different instruments, including monthly options. 

NSE looks beyond options for growth 

India’s Securities and Exchange Board has introduced measures aimed at curbing speculative options activity by increasing trading costs, while also seeking to encourage greater participation in the cash market. 

NSE is prepared to support further development of the cash segment if that becomes a regulatory objective. 

The exchange is also looking at opportunities outside its core equity and derivatives businesses. 

Allowing foreign portfolio investors to participate in bullion contracts could support the growth of NSE’s commodities business. India on Thursday permitted FPIs to trade in physically settled non-agricultural commodity derivatives. 

The change broadens the investor base for contracts such as bullion and brings the domestic framework closer to practices in other major markets. 

Foreign portfolio investors will also be able to use capital already allocated for equity investments to participate in commodity derivatives. 

Commodities and data emerge as additional businesses 

NSE expects commodities and data monetisation to gradually develop beyond their current supporting roles and become independent sources of revenue. 

The push to broaden its businesses comes as the exchange adjusts to changes in India’s derivatives market while maintaining its dominant position in cash equities and options. 

At the same time, the question of self-listing has returned to attention following NSE’s debut on the BSE, reopening a regulatory issue that India considered more than a decade ago.