Deutsche Boerse to invest in India stock, commodity markets

Deutsche Boerse AG plans to hold stakes in two new Indian securities markets being developed by the BSE.

The German exchange operator will invest as much as five per cent in a planned commodities exchange, BSE Ltd Chief Executive Officer Ashishkumar Chauhan said in an interview in London on March 27. Deutsche Boerse will also take a holding in a new stock-trading venue based in Gujarat state.

The new investments would increase Deutsche Boerse's financial commitment to Asia's oldest stock exchange.

The German company bought a five per cent stake in BSE in 2007 and announced a wide-ranging technology alliance in 2013 that has led the BSE to move its equity and derivatives platforms on to Deutsche Boerse's N7 trading network.

The much faster transaction speeds have enabled BSE to rebuild its market share against its main domestic rival, National Stock Exchange of India Ltd.

"By getting Deutsche on board, BSE's exchanges will benefit from better technology, ideas, innovation and best practices," Jagannadham Thunuguntla, the head of fundamental research at Karvy Stock Broking Ltd in the southern Indian city of Hyderabad, said in a phone interview. "India is bracing up for competitive action on the exchange front as the markets are projected to grow."

Market share
BSE's share of Indian stock trading will reach 18 to 20 per cent in March, compared with 13 to 14 per cent a year earlier, Chauhan said. It will account for 30 per cent of equity- derivative trades, up from 15 to 20 per cent, he added. BSE's currency derivatives now account for half the market, compared with two to three per cent a year ago.

NSE has also agreed to set up a new stock exchange in Gujarat. The rival market operators will open their venues inside a new special economic zone that is being developed on the outskirts of Gandhinagar, the state capital. Deutsche Boerse spokesman Frank Herkenhoff declined to comment in an e-mail.

The German exchange operator has picked a new chief executive officer, Carsten Kengeter, who joins the company next month.

"The co-operation will be in data, sales and also financial participation," Chauhan said. "Depending on their appetite."