With NSE Sidelined, Shares of India Exchanges Are Floundering

(Bloomberg) -- India's dominant stock venue is unable to list its shares due to a regulatory probe. For the last six months, investors probably wished the country's other exchanges never went public, either.

Multi Commodity Exchange of India Ltd. fell the most among all global exchanges in the past six months, declining 29 percent. BSE Ltd., which trades stocks and currency derivatives, dropped 17 percent. Both are struggling to increase volume and expand due to strict regulatory oversight, according to Ashish Chopra, analyst at Motilal Oswal Securities Ltd.

BSE hosts less than 20 percent of stock market trading and 5 percent of derivatives in India, with NSE controlling the rest. Volume traded in Indian commodity derivatives exchanges dropped by half in the year ended March 2018 from four years ago, according to data from the regulator. “Volume growth may still happen, but revenue growth may not be that great,” Ashishkumar Chauhan, chief executive officer at BSE, said in an interview. “We don't do business like a business, we are more focused in compliance as frontline regulators. And if the business happens, that's OK.”

The operator of India's top bourse shelved plans to list in 2017 because of an investigation into whether the exchange gave high-frequency traders unfair access to its systems. NSE's former CEO Chitra Ramkrishna quit weeks before it filed an IPO draft prospectus, while millions of dollars of revenue has been temporarily confiscated by the regulator. Even though NSE said it is looking to sell shares in an IPO by March 2019, it's not clear it will make the deadline.

To contact the reporter on this story: Santanu Chakraborty in Mumbai at schakrabor11@bloomberg.net.

To contact the editors responsible for this story: Divya Balji at dbalji1@bloomberg.net, Chris Nagi

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