V. Balasubramanian to head India International Exchange
Balasubramanian, who will be MD and COO of India International Exchange (INX), will be joined by 70-80 officials from Mumbai office of BSE
Mumbai/Ahmedabad: Asia’s oldest stock exchange BSE Ltd has deputed its chief business officer V. Balasubramanian to head its new international exchange in Gujarat that will compete with similar bourses in Singapore and Hong Kong.
Balasubramanian, who will be managing director and chief operating officer of India International Exchange (INX), will be joined by 70-80 officials from Mumbai, BSE’s managing director and chief executive officer Ashish Chauhan said. Trading at INX, a wholly owned subsidiary of BSE, will commence a week from now.
“Most of our top management is in place and some more are in the process of being hired,” Chauhan said in an interview at the BSE office in Gujarat International Financial Tech (GIFT) City office.
Chauhan will be chairman of the INX board, which will also include former Reserve Bank of India deputy governor Anand Sinha, and economist Ajit Ranade.
Prime Minister Narendra Modi inaugurated the exchange on Monday. Trading will start on 16 January.
The Securities and Exchange Board of India (Sebi) has allowed exchanges to launch trading in a vast range of products such as equity derivatives, currency and commodities, barring agricultural futures. Exchanges have freedom to decide on trading hours; cross-margining between various asset classes is allowed.
Initially, INX will be open for 22 hours a day, which may be extended to 23 hours later. In the first year, the exchange plans to focus on equity derivatives and currency.
An international exchange targeting foreign investors is India’s attempt to take on the $48 billion worth of offshore trade and business activities from Singapore, Dubai and Hong Kong, which already have such exchanges in place.
With an investment of Rs150-200 crore and another Rs500 crore planned, BSE is targeting to be profitable in the next 2-3 years.
“GIFT City is India’s answer to Hong Kong. It will help bring $1-3 trillion investments in the next 10-15 years,” said Chauhan.
Considering that GIFT is operating under a relaxed regulatory framework of easier foreign currency loans, easier registration processes and a tax holiday, trades happening in these exchanges will have an advantage over domestic markets.
“Yes; exchanges in GIFT have an advantage over domestic exchanges but they are not targeting the same set of investors and clients; so the fear of cannibalism is limited. Anyways, such investors were already trading in the foreign exchanges with similar offering,” Chauhan said.
In the last budget, the government announced various concessions for GIFT. Transaction taxes and stamp duty won’t be levied in international financial services centres. Firms operating in them will enjoy a tax holiday.
According to Sebi regulations, exchanges must have at least 50 brokers actively trading from GIFT to begin operations. This was later relaxed to 25 brokers, with the caveat that they need to comply with the requirement in three months.
BSE has already received applications from around 90-100 brokers to shift to GIFT for trading and 50 have already taken registration.
“Around 125 brokers are also planning to shift some of their operations to GIFT,” said Chauhan.
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