‘To mitigate risks, India needs two vibrant bourses’

livemint.com:

BSE Ltd on 4 January, says his mandate is to ensure that Asia’s oldest stock exchange becomes more vibrant with increased participation by retail, foreign and domestic institutional investors and algo traders. He has requested brokers to change their front-end software solution to include BSE’s cash and derivatives segments to offer more choices to participants. And many of them have obliged.

He is also in talks with custodians, clearing corporations, trading and clearing members to facilitate offering a consolidated best price for foreign institutions. Further, he is in discussions with mutual funds to bolster their presence on the exchange and deepen liquidity. Investors have given a thumbs up to Ramamurthy’s efforts, with the BSE share rising 128% from ₹547.3 on 4 January to ₹1,246.35 on 18 September.

Edited excerpts: There are challenges in the cash segment that we are trying to address. In respect of retail, many of the brokers are yet to provide for intraday operability on their front-end trading software, despite the regulator permitting the same. By intraday interoperability, an investor can, say, buy a share on NSE (National Stock Exchange of India Ltd) and sell it on BSE with the margin being netted off, thanks to a single clearing corporation, which nets off the risk, with the benefit of this being accrued by the clearing member.

This benefit is not passed on to retail, as many brokers don’t provide for this kind of trading on their front-end software. We are meeting with several brokers and requesting them to facilitate this for the benefit of the retail investor. Some of them have changed it, and some are in the process of doing so.