BSE seeks clarity from Sebi over foreign licensing

Leading bourse BSE will seek clarity from the Securities and Exchange Board of India (Sebi) over the expiry date for licensing of tie-ups. The exchange has tie-ups with the Dubai Gold and Commodity Exchange (DGCX) and Deutsche Börse for offshore derivatives trading in S&P BSE Sensex contracts. The agreements end in August.

A licensing agreement of the National Stock Exchange (NSE) with the Singapore Exchange (SGX) has got extended till April 2019, due to pending arbitration.

“The BSE wants clarity if its agreement should end according to the original terms or they have to be calibrated with the NSE,” said a source.

The BSE declined to comment on the issue.

Unlike the NSE, the BSE’s agreement with foreign partners hasn’t run into any dispute. Both parties are ready to terminate their licensing agreements after a six-month notice period.

In February, the NSE, the BSE and the Metropolitan Stock Exchange of India, issued a joint statement announcing termination of their licensing agreements with foreign counterparts for offshore trading in Indian derivatives.

While the agreement between the NSE and the SGX was to end in August, a legal feud between the two has resulted in extension of the expiry date. The NSE challenged the Singapore bourse’s move to launch India products, stating they were a replica of its Nifty products. The matter has gone into arbitration and the final order is likely in early February 2019.

Sources say the NSE has briefed Sebi on the status of arbitration proceedings and course of action.

Currently, the Sensex contracts are actively traded on the DGCX, however, volumes have been dwindling. In February, close to 19,000 Sensex contracts were traded. The volume has now come down to 3,500.

In 2013, the BSE and the Deutsche Börse entered into an agreement on trading architecture. In the same year, the latter signed a market data cooperation agreement with the BSE to act as exclusive licensor of BSE market data and information products to all international clients. Since 2015, Deutsche, its derivatives exchange, Eurex, and the BSE jointly offer connectivity services to market participants in Hong Kong and Singapore.

In February, the DGCX had said it was working with the BSE on some alternatives. The details have not been disclosed.