Bombay Stock Exchange

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Bombay Stock Exchange
Bse logo.png
Founded 1875
Headquarters Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai- 400001

Image: 200 pixels

Key People Ashishkumar Chauhan, CEO
Products SENSEX benchmark and other indices
Website http://www.bseindia.com/

The BSE, formerly the Bombay Stock Exchange, is a publicly traded stock and derivatives exchange and the oldest stock exchange in India.

The exchange went public on February 3, 2017, and offers stocks and derivatives on indexes, currencies, interest rate contracts and mutual funds. It lists more than 5,500 companies, almost 300 small to medium companies on the BSE SME platform, and is the largest online mutual fund platform in India. It is well known for its S&P BSE Sensex Index, which measures India's 30 largest, most liquid and financially sound companies.

The company also operates BSE Bond, an electronic platform for private placement of debt securities. Trades on the exchange are cleared on the India Clearing Corporation, a wholly owned subsidiary of BSE.[1]

BSE also operates India INX, India's first international exchange, which is based in GIFT City or Gujarat International Finance-Tec City in Ahmedabad, an international business zone set up by the government for foreign investors. It launched in January 2017 and runs on Eurex's T7 trading platform, offering futures on equity indexes including the S&P BSE SENSEX INDEX Future, single stock futures, metals, energies and currencies.[2] [3][4] [5]

The BSE ranked 11th in global exchange volume in 2017 with more than 1 billion contracts, up 69 percent from the previous year, according to the Futures Industry Association annual volume survey.[6]

Background

The BSE was founded in 1875 in what was then Bombay as the Native Share & Stock Brokers' Association and gained permanent recognition in 1956 under the Securities Contracts (Regulation) Act. Following two decades of rapid growth in Indian securities trading and investment the exchange demutualized in 2005 and has continued to expand since. In 2008 the BSE requested permission from its regulator the Securities and Exchange Board of India (SEBI) to list its shares on the exchange without an initial public offering (IPO).[7] The BSE's closest competitor in India's equities market today is the more technology-focused National Stock Exchange of India (NSEI).

BSE's IPO

After demutualizing in 2005, the exchange held an initial public offering in January of 2017 and debuted at Rs 1,085 on the National Stock Exchange of India (NSE), its biggest rival, on February 3, 2017, surging 33 per cent over the issue price of Rs 806.[8] [9]

The funds raised through the IPO went to the 9,000 or so existing BSE shareholders, including the Singapore Exchange, the Mauritius-based arm of American investor George Soros’s Quantum Fund, and the foreign fund Atticus. Foreign investors such as Canada-based investor Thomas Caldwell’s Caldwell India Holdings Inc. and US fund Argonaut Private Equity are also investors in the exchange.[10]

The exchange had announced plans for an IPO in 2013 but was delayed by the Indian regulator, Sebi. It received approval from Sebi in March of 2016.[11] and in June of 2016 shareholders approved its proposed IPO plan.[12][13]

Deutsche Boerse and Singapore Exchange are BSE's strategic partners and shareholders, with a 5 percent stake each. Deutsche Boerse bought its stake in BSE in 2007 and announced a technology alliance in 2013 that led the BSE to move its equity and derivatives platforms on to Deutsche Boerse’s N7 trading network. [14] Its domestic shareholders include Life Insurance Corporation of India, State Bank of India and Bajaj Holdings and Investment Ltd.

Other Partnerships and Acquisitions

In August 2009 the BSE announced it was taking a 15 percent interest in India's newly-formed United Stock Exchange (USE), which planned to list financial derivatives such as interest rate futures.[15] Several weeks after the announcement the BSE gained approval from SEBI to list its own interest rate futures contracts.[16]

In November 2009, the exchange announced that it would offer single stock futures and options. The monthly derivatives contracts have starting dates and expiration dates at the beginning and end of each month to compete with contracts from the National Stock Exchange, which start at the beginning of the month and expire on the last Thursday of each month.[17] [18]

On July 14, 2010, BSE and Eurex announced they would launch futures and options on the BSE's blue-chip Sensex on Eurex beginning October 4, 2010. The futures and options contracts were delisted by Eurex on April 3, 2018. BSE launched the S&P Sensex Futures Index in 2014 although they were delisted later. BSE launched weekly futures and options on the Sensex 50 index in October 2018 and Sensex 30 futures are listed on the India INX market.[19][20][21]

In October 2014 BSE acquired the exchange's regional rival the United Stock Exchange of India. The USE listed five currency contracts, the most liquid of which was the USD/Rupee option.[22] The deal received approval from the Competition Commission of India and the Securities and Exchange Board of India (SEBI).[23]

In January 2017, BSE launched an international exchange called India INX and clearinghouse at GIFT city, a business district in the Indian state of Gujarat.[24]

Benchmark

The free-floating, 30-stock index known as S&P BSE SENSEX Index is known around the world as India's equities benchmark and is also traded on the BSE as an exchange traded fund called SPIcE and through Barclays Global Investors as an iShares fund called iShares BSE SENSEX India Tracker.[25] It was first calculated in 1986 as a cap-weighted index and was shifted to a calculation based on free float market capitalization in 2003. It is the fourth-best performing stock index in the world, with a return of 22.7% in 2014, after adjustments made for fluctuations against the US dollar.[26]

In February 2013 BSE Ltd formed a joint venture with S&P Dow Jones Indices to manage the bourse's equity indices. After the partnership, BSE’s equity indices carried the prefix S&P and are calculated, disseminated and licensed by S&P Dow Jones Indices. Following the joint venture, BSE’s Sensex was named the S&P Sensex. BSE's wider indices, the BSE-100 and BSE-200, also carry the S&P prefix. [27]

Contract Volume

Year Total Annual Volume* Percent Change
2018 1,032,693,325 69.5%
2017 609,215,973 12.2%
2016 543,058,508 (-) 11.7%
2015 614,894,523 (-)18.6%
2014 725,841,680 184.8%
2013 254,845,929 4.6%
2012 243,757,257 7879.5%
2011 ~3,050,000 (est.) --

India INX Contract Volume

Year Total Annual Volume* Percent Change
2018 9,935,578 1,170%
2017 781,789

Key People

Education Services

In early August, 2010, the U.S.-based Options Industry Council and the BSE announced cooperation on educational offerings aimed at Indian investors including sharing online content, case studies, research and white papers promoting the responsible use of options, as well as seminars to be held in several Indian cities.[28]

References

  1. BSE creates history! Exchange lists at Rs 1,085, 34.62% premium over issue price. The Economic Times of India.
  2. Company Overview. BSE.
  3. About India INX. BSE.
  4. Product Overview. India INX.
  5. About India INX. BSE.
  6. 2018 Annual Volume Survey. Futures Industry.org.
  7. BSE should set its house in order before listing, says Sebi. Business Standard.
  8. BSE makes stellar debut on NSE. The Times of India.
  9. The week that was: BSE gives IPO mart a great start, but cash ban hangover stays. The Economic Times of India.
  10. BSE IPO: 142 years after taking roots under a banyan, Asia’s oldest stock exchange hits the capital market today. Quartz India.
  11. BSE plans to sell up to 30% stake in IPO. CNBC.
  12. BSE shareholders okay IPO plan. Business Standard.
  13. BSE to sell up to 30% stake by FY17-end. Livemint.
  14. Deutsche Boerse to Invest in India Stock, Commodity Markets. Bloomberg.
  15. Key Statistics - Business Transacted at BSE. Bombay Stock Exchange.
  16. BSE receives SEBI approval to launch Interest Rate Futures. Bombay Stock Exchange.
  17. BSE Seeks Approval for Mid-Month Derivatives Products. Wall Street Journal.
  18. Stock Futures. Bombay Stock Exchange.
  19. Press Release. Eurex.
  20. Equity Index Derivatives: Discontinuation of clearing services for futures and options on the Sensex Index. Eurex.
  21. BSE to introduce weekly F&O contracts on Sensex 50 from Friday. India Times.
  22. BSE shareholders approve deal with USE. FOW.
  23. BSE Shareholders approve BSE-USE merger. BSE.
  24. BSE gets Sebi's in-principle approval for global exchange. Business Standard.
  25. Introduction. Bombay Stock Exchange.
  26. The 5 Best Performing Stock Markets In The World In 2014. Bidness Etc..
  27. Sensex to carry S&P tag. Live Mint.
  28. Press Release. OIC.