BSE calls off merger talks for India INX and NSE IX at Gift City

BSE, in an email communication to NSE on Wednesday, stated that it has decided against going ahead with the merger

The proposed merger between Gift City based exchanges -- NSE International Exchange (NSE IX) and BSE’s India International Exchange (India INX) -- has been called off with BSE deciding to go alone in the International Financial Services Centre (IFSC).

According to people familiar with the development, BSE, in an email communication to NSE on Wednesday, stated that it has decided against going ahead with the merger.

The BSE spokesperson confirmed the development and said that the bourse is "discontinuing the merger discussion."An email query sent to NSE remained unanswered till the time of filing this story.

This development assumes significance as the merger plans were initiated by the government and policy makers with the head of the International Financial Services Centres Authority (IFSCA) – the regulatory body for Gift City – stating late last year that the merger between India INX and NSE IX would be completed by January this year.

“The process is in its advanced stage and the merger should be completed in a month,” IFSCA chairperson K Rajaraman had said at the side lines of IVCA Private Credit Summit 2023 held in December last year.

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Meanwhile, people familiar with the development say that BSE plans to invest around Rs 250-500 crore over the next few years to develop its Gift City exchange even as the last few months saw merger-related deliberations at the board levels at four exchanges – BSE, NSE, India INX and NSE IX.

They further add 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 & CEO Sundararaman Ramamurthy in the derivatives segment – its market share has risen from near zero levels a year back to 15-20 percent 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.