India needs over 1 vibrant exchange, tweaking products to enliven BSE: CEO

India needs more than one vibrant exchange, and the BSE is tweaking its capital market products to revitalise the bourse and offer greater flexibility to investors, a top official said.

The goal is to encourage technology providers, brokers and end users to actively participate in the BSE, he said.

"India requires more than one active exchange, and hence the need to make the BSE more vibrant. We trying to differentiate by tweaking our product offerings," the bourse's MD & CEO Sundararaman Ramamurthy said in an interview to PTI.

After taking over the bourse's charge in January, Ramamurthy has taken several measures to reinvigorate the BSE.

"We are re-launching Sensex and Bankex derivatives with lower lot sizes and a new expiry cycle of Friday from May 15. The launch of Sensex 30 and Bankex derivatives will provide investors an opportunity to trade these popular and well-tracked indices,'' he said.

"We will also be approaching the regulator for introducing weekly options expiries on multiple days of the week, similar to what it is in the US. That will be subject to regulatory approval," Ramamurthy said.

Besides, the BSE will continue to strengthen the StAR MF, India INX, and SME platforms, where we are the market leaders, he stated. BSE StAR MF is India's largest mutual funds distribution platform.

The lot size of futures and options will be reduced to 10 from 15 for Sensex, and to 15 from 20 in case of Bankex, the top BSE official said.

The new contracts aim at deepening the market, providing greater flexibility to investors with lower capital to hedge their risk with differential settlement day of Friday and smaller lot sizes, Ramamurthy said.

Derivatives are considered to be high-risk-reward financial instruments aimed at hedging risk in the equity market.

BSE is committed to provide innovative and cost-effective solutions to meet the evolving needs of customers, Ramamurthy said.

He also said the country's oldest exchange does not charge any transaction fees for equity futures, and charges 90 per cent less fees for equity options than its rival NSE, which commands significant market share.

BSE's equity market share declined from 42 per cent to 7.2 per cent over the past two decades, and its equity derivatives market share fell to less than one per cent during the period, according to industry data.

The Sensex and Nifty have a 99.92 per cent correlation, while Bankex and Nifty Bank have a 99.97 per cent correlation, according to historical trading data over the past 11 years. This will encourage market participants to create strategies that leverage both exchange platforms, he said.

In March, the BSE reduced the strike interval from 25 paise to 10 paise in currency options and introduced 1 paisa tick size in cash equities for stocks priced below Rs 100, and these steps helped in improving liquidity, Ramamurthy added.