BSE's India International Exchange​ to go live post 'Makar Sankranti'

Mumbai: BSE's India International Exchange at GIFT city will go live for trading post the festival of 'Makar Sankranti' later this month, and will offer only derivative products for the first six months at least.

The India International Exchange, which is a wholly-owned subsidiary of top domestic bourse BSE, will be inaugurated by Prime Minister Narendra Modi on January 9 at Gujarat International Finance Tec (GIFT) city -- the country's first International Financial Services Centre (IFSC).

The bourse is expected to begin trading activities post Makar Sankranti, which will be observed on January 14.

"In the first phase, we will start trading only in derivative products (in equity, currency and commodities). Later on, we shall offer depository receipts and bonds on the India INX platform,"

BSE Managing Director and CEO Ashishkumar Chauhan told PTI in an interview.

The second phase is likely to take six months to one year for implementation, he said, adding that depository receipts and bonds would be offered once the required infrastructure for the same is in place.

"It will take us some time to understand and also set up the infrastructure as well as set up a new depository or tie-up with an international depository. Besides, a regulatory structure has to be enabled for this to happen," he said.

Chauhan also said that a robust risk management system is in place to prevent market manipulation and money laundering.

According to the BSE chief executive, while market participants and investors are excited about the international exchange, the Sebi norms "are more stringent compared to international markets".

"All international regulations would be applied here as well, in addition regulator Sebi has issued norms specifically created for the GIFT city which are more stringent than the IOSCO guidelines," Chauhan said.

"But, this is important as India does not want to become a haven for tax evasion and market manipulation," he noted.

As many as 250 trading members, including commodity brokers as well as brokers settled overseas, have expressed interest to function at India INX.

"Many see it as a good opportunity with low risks to expand business by accessing international clients such as NRIs," Chauhan said adding that no complaints have been raised by the market participants yet with regard to procedures.

"In the first phase, the interest is largely coming from larger traders, high frequency traders who are basically used to working in international markets," Chauhan said. 

Noting that the technology set up at India Inx is similar to one offered by it on the domestic bourse, Chauhan said that its trading platform has achieved a speed of 3-4 microseconds at the international exchange, bringing it in league with technology in rest of the world.

India International Exchange will offer T7 trading platform, currently used by BSE with speed of 6 microseconds.

Moreover, a new management has been put in place for the India International Exchange and is presently run by BSE officials.

"BSE has identified people to run all the departments. It has also hired people of Indian origin from overseas... currently it has a capacity of 70-100 people," Chauhan said.

Asked about sharing cost of operation, Chauhan said that currently BSE will undertake the cost on its own, however, once the exchange is stabilised and gain liquidity, it can explore opportunity to sell stake in it to other players.

The GIFT city will be the first IFSC of India where there would be no levy of securities transaction tax, commodities transaction tax, stamp duty, service tax and income tax. Only MAT (minimum alternate tax) will be applicable.

The international exchange would help Indian corporates raise equity from foreign investors by getting listed and provide companies incorporated outside India a platform to raise money in foreign currencies by the issuance and listing of their equity shares on the international exchange.

IFSC offers various benefits to market players including low cost of operations, low priced resources including land as compared to other countries like Singapore and Dubai.