After receiving support from the Indian government, India’s three private stock exchanges – National Stock Exchange, BSE Ltd and MSEI Ltd in a joint announcement said that they will not provide data to foreign rivals. The move to cut off data to global bourses is, as per sources, crucial to attract foreign investments into the country from Singapore and other financial centres.
The sources refused to be identified but a senior finance ministry official said that the government had held “wide consultations” on whether to support the exchanges’ actions, and concluded that it was needed to allow a new international finance centre being set up in India “to compete with Singapore and Dubai.”
The official who did not wish to be identified as he was not authorized to speak to the media added, “We have to balance the needs for domestic interests and our image in the global market.”
Index provider MSCI Inc blasted the move by the exchanges, labelling them as ‘protectionist’. The decision also reflects caution on the part of Indian officials regarding the trading of Indian derivative products overseas, outside the boundaries of domestic regulators.
The action is also a tactical move to lure foreign investors to an international financial centre being developed in Gujarat, Prime Minister Narendra Modi’s home state.
Called Gujarat International Finance Tec-City, or GIFT City, the financial centre has not been successful in gaining much traction since INX, a unit of the Bombay Stock Exchange, became the first exchange to set up there last year.
GIFT City is well equipped and boasts of central cooling systems across all buildings and sophisticated IT networks and servers. It has no taxes on capital gains or transactions and no stamp duties and most derivative contracts are also dollar-based, removing currency risks.
Yet it remains uncertain whether the centre can become a top-notch financial hub or not.