Alliance with S&P Dow Jones to make BSE a global brand

SPDJI will float Asia Index Services with BSE to scape up its business in the region

Top index service provider S&P Dow Jones Indices (SPDJI) will make India a major operational hub for global business clients. The Bombay Stock Exchange (BSE) and SPDJI have formed a 50:50 joint venture to float Asia Index Services (AIS) for this purpose.

According to market players, the deal between BSE and SPDJI for working out a joint business strategy is significant in many ways. While SPDJI will shift a part of its global back office work to India, BSE will be able to leverage on the index services major to take its brand, Sensex, global. SPDJI officials say they have started working on upgrading their technology in India to scale up business in Asia. Last month, SPDJI offices were shifted to Mumbai’s Phiroze Jeejeebhoy Towers, where the BSE is located.

SPDJI was born out of the merger of parent companies McGraw-Hill and the CME Group last year. It is the world's largest global resource for index-based concepts, data and research. McGraw-Hill controls 73 per cent in SPDJI, while CME, the biggest US futures exchange operator by revenues, owns 24.4 per cent. The remaining 2.6 per cent is owned by Dow Jones. SPDJI now has 830,000 indices covering a range of asset classes around the world.

In India, BSE sells Sensex as the common man_s index, but it has not achieved success in doing so with global investors in the absence of an effective partner. Thus, BSE has rechristened its basket of indices by adding S&P as prefix. BSE index methodology is now based on the SPDJI guidance.

Prior to joining hands with BSE, S&P shared its brand with the National Stock Exchange (NSE). While it gave S&P entry to India, NSE_s key benchmark equity index, Nifty, gained popularity among global investors thanks to the partnership.

The nearly two-decade-old NSE not only managed to overtake BSE, India_s oldest exchange, to become the country_s largest bourse, but its global tie-ups also gave the exchange the much-needed edge.

Another index service provider, FTSE, has not forged any exclusive partnership and is open to associate with both the NSE and the newly-launched MCX SX, say its officials. FTSE, owned by the London Stock Exchange group, is the main rival of SPDJI.

While MCX SX is yet to launch its benchmark index SX-40 for trading in India, NSE has captured space in the US by listing on the CME Globex, the most-widely distributed electronic platform globally. In the Europe, Sensex is listed on Eurex controlled by German operator Deutsche Boerse and SIX Swiss Exchange. There is a possibility that Sensex may also list on CME, say experts.