BSE to seek US regulator nod for FBT status

Asia's oldest bourse BSE is planning to seek US regulator's nod for holding the status of Foreign Board of Trade (FBT) for its India International Exchange in GIFT city, a top BSE official has said. "We are in the process of applying to seek approval from Commodities Futures Trading Commission (CFTC) as an FBT for our India International Exchange," BSE MD & CEO Ashish Kumar Chauhan told PTI. FBT is any board of trade, exchange or market located outside the United States. Some countries have obtained approval as FBT like in Singapore.

FBT allows US brokers to trade directly from their systems in derivative products offered by India International Exchange, the average volume of which has reached USD 400-500 million per day, Chauhan said. The National Stock Exchange (NSE) was also mulling a similar venture for Gujarat International Finance Tec-City (GIFT).

 In February, on market regulator SEBI's instructions, the stock exchanges had said they will immediately stop trading of their indices on foreign bourses as part of a joint effort to stem the migration of liquidity to overseas markets. On the proposed insurance platform, Chauhan said that BSE has formed a joint venture with US technology company Ebix to facilitate setting up an insurance distribution platform on the lines of BSE StAR MF platform.

"Ebix and BSE will hold 40 per cent each and the rest 20 per cent will be held by other Indian entities or those nominated by Ebix and BSE. The initial capital is Rs 25 crore," he said. Seeking to expand its footprint as a financial supermarket, BSE has decided to foray into insurance distribution following the success of BSE StAR MF. "We are in the process of filing with the insurance regulator IRDA for approval. We expect to be ready to commence operations in 3-4 months after the regulatory approvals," Chauhan said.

"Ebix, a leading insurance exchange in the US, has a proven technology and business model for insurance distribution. Transactions in insurance are more complex than even mutual fund distribution," he said. The joint venture company will leverage the network of MF agents close to two lakh across 3,000 towns and cities. Initially, BSE may not charge any fees for offering the platform as an aggregator.

However, after 10 years of MF StAR platform, BSE has begun to charge Rs 5 per transaction from last month after the volumes soared. "The platform does about 20 lakh transactions per month. About 20 per cent of the total investment in MF is routed through BSE. While, 30-40 per cent of new money inflows are from us," Chauhan said. Meanwhile, BSE is also gearing up for launching commodities on the bourse from October 1 following SEBI's nod.

BSE said it is ready to keep the bourse open till late in the night from October 1 for the equity derivatives. India International Exchange at GIFT city functions till late at night to support trade in tandem with international markets. "We have to handhold some 200 brokers for late night trading," Chauhan said.