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BSE Calls off Merger of GIFT City Unit With NSE: Report

The merger was called off because the preliminary talks, which had been ongoing since late 2022, were too prolonged, according to news reports.
GIFT City. Photo: Unsplash

New Delhi: The merger between BSE’s unit at GIFT IFSC, India International Exchange (India INX), and NSE’s unit, NSE International Exchange (NSE IX), has been called off, Business Standard reported.

Despite over a year of discussions, no progress was made, the newspaper reported.

Sources told the business daily that the preliminary talks, which had been ongoing since late 2022, were too prolonged, leading to a decision to focus elsewhere.

“Merger discussions were at a preliminary stage. Since it’s taking long with no end in sight, it was decided to focus elsewhere,” the source in know of the matter said.

The proposed merger, surprising given the fierce competition between BSE and NSE in onshore trading, was driven by government and policymakers to unify liquidity at GIFT IFSC.

This is a major setback to GIFT City’s ambitions of becoming a global financial hub, Mint said.

The cancellation of the merger comes at a time when the GIFT City unified regulator, International Financial Services Centres Authority  (IFSCA), plans measures to facilitate direct listing at the exchanges and boost participation. The international exchanges offer trading for nearly 22 hours to cater to an audience across the globe, the report said.

Late last year, the head of IFSCA, K. Rajaraman, had said that the merger would be completed by January this year.

Business Standard had reported in January that the government permitted the direct listing of domestic companies on the international exchanges in GIFT IFSC. The move will enable startups and other domestic companies to access the global market and raise capital in foreign currency through GIFT IFSC.

People familiar with the matter told moneycontrol that “the decision could have been triggered by the fact that BSE, which is Asia’s oldest stock exchange with its origins going back all the way to 1875, has tasted some amount of success under its current MD and CEO Sundararaman Ramamurthy in the derivatives segment – its market share has risen from near zero levels a year back to 15-20% in the recent months.”

“At Gift City, however, NSE IX dominates the market with its hugely popular Gift Nifty contracts registering a turnover in excess of $82 billion in April. While on most days it sees a turnover in the range of $1-3 billion, there were a few trading sessions when there was a spike in the turnover. On the other hand, the daily average turnover on BSE’s India INX is typically a few hundred million dollars,” the report said, citing the people quoted above.
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