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BSE, NSE, MSE to stop trading of their indices on foreign bourses

Volumes in derivative trading based on Indian securities including indices have reached large proportions in some of the foreign jurisdictions, resulting in migration of liquidity from India, which is not in the best interest of Indian markets.

Indian Exchanges through a licensing arrangement, provide their Market Data at various levels (Real time, Delayed feed and End of the day feed) to Index Providers either directly or through their subsidiaries/group entities or through third party data vendors, for creating Indices. Such indices are licensed by the Index Providers to prospective licensees, including foreign stock and derivatives exchanges and other foreign trading platforms (“foreign exchanges and/ or trading platforms”) for enabling them to provide products for trading and settlement on such foreign exchanges and/ or foreign trading platforms.

Additionally, it is possible that Exchanges could also create indices based on their Market Data which could then be licensed to such foreign exchanges and/ or trading platforms, for the purpose of trading and settlement of products based on such indices outside India.

It is observed that for various reasons the volumes in derivative trading based on Indian securities including indices have reached large proportions in some of the foreign jurisdictions, resulting in migration of liquidity from India, which is not in the best interest of Indian markets.

In view of the abov, it has been decided that:

1. Exchanges or their subsidiaries/group entities or any other entity having licensing arrangement with Exchanges shall not license/provide Indian Indices and/or the data including the price of Indian securities to any foreign exchange and/ or trading platforms for trading or settling derivatives in any form in a foreign jurisdiction.

2. Exchanges, either directly or through their subsidiaries/group entities or through third party data vendors, shall not license/provide Market Data including prices of securities traded on the Exchange’s platform to –

a) any exchange or a trading or settling venue outside India, for trading or settling any products including derivatives.
b) any Index Provider and / or its licensee, for creation of  Indices or products based on such indices, which in part (weightage of 25% or more on Indian securities) or in full are based on prices of securities/indices listed in India or are benchmarked to Indian indices, which may be made available for trading or settling derivatives on any foreign exchanges and/ or trading platforms; and
c) any licensee, either directly or through its subsidiaries/group entities or through a third party data vendor in any form or manner for the purpose of trading or settling derivative products on any foreign exchange and/ or foreign trading platforms. Further, such licensee is also not permitted to use Market Data for the issuance of overseas derivatives instruments and/or structured products on exchange-traded derivative contracts on Indian securities traded on foreign exchanges and/ or trading platforms.
3. The conditions mentioned at Point (1) and (2)above, however, shall not be applicable for;
(I)Products/indices traded on any exchange or trading venue in any International Financial Services Centre (IFSC) operating in India, subject to prior written permission of the licensor.
(II)Issuance of any Exchange Traded Funds / Exchange Traded Notes or similar products by any entity, subject to prior written permission of the licensor.
4. The existing licensing agreements for licensing indices/prices of Indian securities for trading derivatives on foreign exchanges and/ or trading platforms shall be terminated with immediate effect, subject to the notice period mentioned in the respective licensing agreements.

5. The other arrangements if any shall be grandfathered for a period of one month and the exchanges, Market participants, Index providers, data vendors, their subsidiary, group companies or any other relevant party shall ensure that arrangements are terminated or modified to comply with the contents of this press release.

6. End of Day and final settlement prices of securities shall be displayed on the exchange website and forwarded to media organizations, 2 hours after close of the market.