BSE plans foray into insurance

Had applied to Sebi in July for permission to start web aggregator, broking arms

The BSE (formerly Bombay Stock Exchange), which is gearing up for its initial public offering, is seeking to expand its footprint as a financial supermarket. The bourse, which already has a presence in the mutual fund business with BSE Star MF, has applied to the Securities and Exchange Board of India (Sebi) to float two insurance-related arms under its fully-owned subsidiary BSE Investments.

According to the draft red herring prospectus (DRHP) filed with the regulator earlier this month, the bourse submitted in July an "application for approval for activities undertaken by BSE Investments and BSE CSR as an insurance web aggregator and insurance broker by setting up two subsidiaries under BSE Investments."

An exchange official said the plan is to provide an IT (information technology) platform for the exchange's members who would like to sell insurance products to clients. "The platform would allow them to organise and manage their insurance broking activities." The official said plans would crystallise only after the approvals materialise.

Insurance would complete the portfolio of services that a member of the exchange can offer, which already includes all kinds of exchange traded products such as stocks, equity and currency derivatives, debt instruments, SME stocks and mutual funds.

Arun Kejriwal, founder, Kejriwal Research and Investment Services, said the success of the MF platform has inspired BSE to get into insurance. "NSE has gone much ahead in trading. BSE has the (customer) base, standing and money. By getting into the broader financial services, they are trying to stay in the game. Even though, you are not making pots of money, you are fulfilling a key need in the marketplace. You are providing everything across the financial services spectrum."

Kejriwal added that such platforms can expand the market by bringing in new categories of consumers to these products.

BSE Star MF, launched in 2009, offers a platform to invest and redeem in 39 asset management companies ("AMCs") with 6,112 different mutual fund schemes As on June 30, 2016. Total funds invested stood at Rs 85,175.07 crore.

According to the DRHP, BSE has three broad lines of business. "We operate in three primary lines of business: the listing business, which consists of the primary market, which relates to the issuance of new securities; the market business, which consists of (i) the secondary market, which relates to the purchase and sales of previously-issued securities, and (ii) BSE StAR MF , our online platform for the placement of orders and redemptions of units in mutual funds, (iii) NDS-RST, our platform for the reporting over-the-counter corporate bond trading, (iv) membership, which includes membership in the exchange, clearing corporation ICCL, and depository participants in our depository CDSL, and (v) post-trade services, namely the clearing corporation and depository; and, the data business, which consists of the sale and licensing of information products."

BSE Investments is a direct subsidiary of BSE and was incorporated as a public limited company in February, 2014. The main objects of BSE Investments are carrying on the business of a holding and investment company in India or abroad and buy, subscribe, underwrite, invest in shares, stocks, warrants and other money market instruments /securities. The authorised share capital of BSE Investments is Rs 2 crore, divided into 20 million equity shares of Rs 1 each and paid-up share capital of Rs 10 lakh. It was among the loss-making arms of the bourse.