Sensex futures on Chicago bourse soon

Q&A: Rajnikant Patel

The Bombay Stock Exchange (BSE) is poised for a global foray with plans to launch Sensex futures on the Chicago futures exchange. The move comes within a year after Asia's oldest stock exchange underwent demutualisation. BSE is also busy preparing to list itself on the exchanges. BSE Managing Director and Chief Executive Officer Rajnikant Patel discusses his plans with Rajesh Bhayani in an interview. Excerpts:

When will BSE come out with an IPO?
BSE may become the first Indian listed exchange, but we have not yet finalised whether to go for an IPO or to go for direct listing. We can list without an IPO.

Why then the delay in listing?
All companies listed on stock exchanges have to sign the Listing Agreement with the exchange. When the listed company is itself the exchange, there arise governance issues. Exchanges are like self-regulatory organisations and in the case of exchanges listing, there is a possibility of clash of interests between the two.

The delay is because of the process that needs to be followed. We have suggested some options to Sebi on issues related to regulations. We have proposed that a committee of independent members can oversee the compliance of a listed BSE.

Another option is to form a committee of representatives from BSE, Sebi and independent members, under the overall supervision of Sebi, to ensure compliance of the Listing Agreement. Globally, the common practice is to go for self-listing of exchanges.

How is BSE leveraging brand Sensex?
We will launch futures trading on the Chicago futures exchange in a month or two. The trading on Sensex futures will be for 23 hours a day. Internationally, the Sensex is quoted as a barometer of the Indian market.

We believe trading in Sensex futures on overseas exchanges will be popular among foreign investors and can provide valuable hints to Indian investors on how the market will behave the next day.

Would you update us on the SAFE index?
The South Asian Federation of Exchanges (SAFE) is preparing an index of indices of stock exchanges of south Asia. This will be a weighted average index and obviously BSE will have the highest weightage in it.

This could become a barometer index for markets in south Asia. Eventually, products based on this index can be launched on the exchanges of members countries.