NSE favours joint products, not M&As

National Stock Exchange (NSE) of India, the nation’s largest bourse, will seek to collaborate with other exchanges on joint products rather than mergers or acquisitions to drive growth, the chief executive officer said.

The NSE plans to introduce rupee-denominated derivatives based on the UK’s benchmark FTSE 100 Index, the Standard & Poor’s 500 Index and Dow Jones Industrial Average and is seeking an “exciting Far Eastern product,” Ravi Narain said at the World Federation of Exchanges IOMA/IOCA conference. The exchange will also expand in currency and interest-rate derivatives, he said.

“We are busy focusing on internal organic growth,” Narain, 55, said. “Broader alliances outside India work well for us. The moment you do a merger with one exchange you lock out all other exchanges — we are more interested in looking at product by product alliances to see what are the gaps and needs in the Indian financial firmament that we can fill.”

Exchanges have announced takeovers totaling about $20 billion since October as competition forces chief executive officers to seek to cut costs by expanding into new markets. Indian government rules mean shareholders in NSE can only take a 5 per cent stake in the privately held company that has 77 per cent of equity trading in India.

NEW MARKETS
Deutsche Boerse AG agreed a $9.5 billion purchase of NYSE Euronext that would create the world’s largest exchange operator. London Stock Exchange Group said it will acquire Canada’s TMX Group Inc, owner of the Toronto bourse.

Nasdaq OMX Group Inc and IntercontinentalExchange Inc announced a rival offer for NYSE Euronext, which the company’s board has twice rejected. The current wave of consolidation started in Asia when Singapore Exchange bid for ASX Ltd, the Australian stock exchange.