BSE Shares Fall As NSE May Allow Own Shares To Trade On Its Platform

Shares of BSE fell nearly 2% on Thursday after a Bloomberg report said the National Stock Exchange of India (NSE) may allow its shares to trade on its own platform after listing on rival BSE.

BSE shares fell 2.5% from the day's high following the report, as investors assessed the potential impact of NSE shares becoming available for trading on both exchanges.

According to Bloomberg, the possibility was discussed with global investors during recent roadshows for NSE's proposed initial public offering (IPO).

Under the proposal, NSE shares could trade on its platform under the "permitted to trade" category, even though the stock would formally list on BSE.

NSE May Need SEBI Approval

The current regulations do not provide for self-listing by a stock exchange. NSE, which is classified as a market infrastructure institution, would therefore need approval from the Securities and Exchange Board of India (SEBI) to allow its shares to trade on its own platform, Bloomberg reported.

Discussions are ongoing and any such move would ultimately depend on regulatory approval, according to the report.

The possibility of NSE shares trading on its own platform could eventually shift trading volumes between the two exchanges. It could also pave the way for NSE shares to become eligible for inclusion in Nifty benchmark indices.

The "permitted to trade" framework allows securities to trade on NSE without being formally listed there, while their compliance and disclosure obligations remain unchanged, according to NSE's website.

What The Move Could Mean For BSE

NSE revised its index eligibility rules in 2019 to allow securities under the permitted-to-trade framework to qualify for inclusion in Nifty indices. Previously, only stocks formally listed and traded on the exchange were eligible.

Around 250 companies that are not listed on NSE currently trade on its platform under the permitted-to-trade category. These include Elantas Beck India, Goodyear India and Novartis India.

If approved, the proposed arrangement would allow NSE shares to access liquidity on both exchanges while retaining BSE as the formal listing venue.

For BSE, however, the possibility of NSE shares trading on its own platform could raise concerns over future trading volumes, particularly if investors shift some activity towards NSE following its IPO.

The proposed NSE IPO is expected to be closely watched given the exchange's dominant position in India's equity derivatives market and the potential implications of its eventual listing for both NSE and BSE.