Bloomberg News

Citigroup Joins Bombay Stock Exchange Derivative Platform

March 13, 2012

Citigroup Inc. (C) and Bank of America Corp. (BAC) became the first two foreign firms to join the Bombay Stock Exchange’s derivatives platform in India as the bourse extends an incentive program that pays brokers to trade.

Richard Macfarlane, head of equities at Citigroup’s Indian unit, said today the bank will use the BSE Ltd.’s platform to provide institutional clients access to futures and options on the BSE India Sensitive Index, or Sensex. Bank of America has started trading on the BSE, spokeswoman Mona Kwatra said by phone. Two overseas firms have started using the platform, BSE Chief Business Officer V. Balasubramaniam said in a telephone interview on March 9, declining to name them.

“We are extremely excited to partner with the BSE,” Citigroup’s Macfarlane wrote in an e-mail. “The Sensex is a well-accepted benchmark of Indian equities globally.”

Asia’s oldest bourse will extend a 1 billion-rupee ($20 million) program to encourage brokers to trade derivatives beyond the initial six-month period, said Balasubramaniam. The incentive plan, originally meant to end in April, has increased the value of futures and options contracts by 3000-fold.

The value of outstanding contracts on the exchange reached 11 billion rupees on March 12 from 3.2 million rupees on Sept. 27, the day before the pay-to-trade offer began, according to the BSE’s website. The program may help the BSE, partly owned by Deutsche Boerse AG (DB1), boost its share of a market in an arena dominated by Goldman Sachs Group Inc.-backed National Stock Exchange of India Ltd.

Average daily turnover in derivatives in the past month on the BSE was 17 percent of the NSE’s $24 billion, data compiled by Bloomberg from the websites of the two exchanges show. The BSE’s share was less than 1 percent before the program started.

To contact the reporters on this story: Eleni Himaras in Hong Kong at ehimaras@bloomberg.net; Santanu Chakraborty in Mumbai at schakrabor11@bloomberg.net

To contact the editors responsible for this story: Darren Boey at dboey@bloomberg.net; Nick Gentle at ngentle2@bloomberg.net


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