Home / Companies / NSE considers ETFs based on broader indices, different asset classes

Mumbai: The National Stock Exchange of India Ltd (NSE) is planning to launch exchange-traded funds (ETFs) based on broader indices and also on different asset classes, including commodities and fixed income.

Speaking at the India ETF Conference organized by NSE, the exchange’s managing director and chief executive officer Chitra Ramkrishna said that the market for ETF is growing and NSE will launch newer products to capture that.

“Stock exchanges have become multi-asset class institutions. While equity remains the dominant asset, there is a growing trend globally as commodities and fixed income ETFs are gaining popularity," said Ramkrishna, adding that the next few months could see some commodity ETFs being launched.

The domestic ETF market is estimated at nearly 9,000 crore.

Recent decisions from the government are expected to help boost this segment further. For instance, the government has used the ETF route for divestment in state-owned enterprises. The EPFO (Employees’ Provident Fund Organisation), PFRDA (Pension Fund Regulatory and Development Authority) and IRDA (Insurance Regulatory and Development Authority) have allowed entities governed by them to invest via ETFs.

While delivering the keynote address, chairman of the Securities and Exchange Board of India (Sebi), U.K. Sinha, said that the regulatory steps will bring in more money into the domestic capital market.

He, however, cautioned against issues related to liquidity and pricing transparency faced in some overseas markets.

“If there is any need to change the rules for ETFs, then Sebi will listen to a cross section of all market participants and incorporate the views. We will do it at a pace that can be absorbed by the market," said Sinha.

Separately, NSE’s Ramkrishna said that the exchange will soon launch a broader indices with a larger market capitalisation. NSE’s benchmark 50-share Nifty was launched on 3 November 1995 and represents nearly 67% of the total market capitalisation of the equity market.

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