BSE steals a march over NSE in mutual fund volumes

Both exchanges launched their much-hyped mutual fund trading platforms around the same time last year. Since then, volumes on the BSE have far outstripped those on the NSE

Bitter exchange rivals Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) have been at each others’ throats for grabbing a larger share of the cash and derivatives segment in equity trading. It seems another battle is playing out on the newly-promoted mutual fund platforms of both exchanges.

However, the BSE appears to have hit the road running while its bigger rival is desperately trying to play catch-up. BSE has witnessed a sharp spike in trading volumes over the past few months. NSE, on the other hand, has remained mostly stagnant during this period. For the month of December 2009, when BSE StAR MF was launched, subscriptions touched Rs11.61 crore, with net inflows of around Rs4.43 crore. Comparatively, NSE’s MFSS platform registered a turnover of only Rs2.77 crore, with net inflows amounting to Rs1.85 crore.

Volumes on BSE StAR MF have surged by 82%, touching Rs21.19 crore by the end of April this year. On the other hand, volumes on NSE MFSS have witnessed a dip of 13%, touching Rs2.42 crore in April. While net inflows on BSE have jumped 268% to Rs16.30 crore during this period, NSE has barely managed an 18% rise amounting to Rs2.19 crore.

While the NSE was the first to jump into the fray when it launched its NEAT system based MF platform—Mutual Fund Service System (MFSS) on 30th November last year, the BSE followed closely on its heels by opening its Web-based trading platform—BSE StAR MF—on 4th December.

Why is it that NSE is so far behind its smaller competitor in this segment, when it enjoys an enviable market share in the equity derivatives segment?

Lack of adequate participation from brokers has probably hurt the NSE in its new venture. Some technical and operational issues have tipped the scales in favour of the BSE platform.

Chandrashekhar Layane, vice president, Fairwealth Financial Services, revealed that brokers prefer the BSE platform due to its comparative ease of use and flexibility. “Brokers favour the BSE platform because it is much more user friendly, not only in terms of technology but also in relation to operations.”
Deena Mehta, managing director, Asit C Mehta, believes that BSE enjoys a first-mover advantage in terms of providing a Web-based Internet platform. “When BSE launched its service, it started with a Web-based Internet platform straight away. Brokers could log in from anywhere and put in the trade. On the other hand, NSE started with its NEAT system. Hardly any broker now has NEAT terminals. We have shifted to Orion terminals. So having a direct connectivity with NSE was not workable.”

Ms Mehta also pointed out that BSE also offers a back-office solution, which facilitates billing and other tasks. “Otherwise, we would have to develop our own back-office software, which takes a lot of time and involves costs. Since BSE has already provided for technological compatibility, it is a lot more convenient for us,” added Ms Mehta.


Govt confident of introducing GST by 1 April 2011

The earlier deadline of introducing GST by this fiscal could not be adhered to after the States and the Centre could not agree on its structure

The empowered committee of States today exuded confidence that the Goods and Services Tax (GST), proposed to replace most indirect taxes in the country, will be implemented from next fiscal, a new deadline after the earlier target was missed, reports PTI.

"That is our target and we will make all efforts to meet the target... We are confident," committee chairman Asim Dasgupta told reporters after meeting finance minister Pranab Mukherjee.

The earlier deadline of introducing GST by this fiscal could not be adhered to after the States and the Centre could not agree to its structure.

While States propose two main rates for goods and one rate for services, the Centre pitched for one rate for goods and services.

In the Budget, Mr Mukherjee had also said, "It will be my earnest endeavour to introduce GST along with DTC in April 2011."

The committee, comprising State finance ministers, would now meet on 21st May on the issue of GST.

"The next meeting of the empowered committee of state finance ministers has been convened on 21st May. As a preparation for that meeting, we needed to have some interaction with the Union finance minister, which we did today," Mr Dasgupta said.

He said the meeting next Friday will discuss relevant matters for implementation of GST.

When asked whether the meeting will take up the issue of Rs50,000 crore for States to meet losses due to switching over to GST as recommended by the 13th Finance Commission, he said all relevant issues will be discussed.

GST is expected to replace excise, service tax at the level of Centre and VAT and other local levies at the States’ end, besides cesses and surcharges.


DP World has ambitious plans, but will it land up in a dry dock?

DP World plans to position the Vallarpadam terminal in competition with other international ports like Colombo and Jebel Ali. However, the group will have to first face issues pertaining to the Indian cabotage policy before starting operations

DP World is proclaiming that it will attract cargo to India from other international ports like Colombo. However, the Vallarpadam terminal, being developed by DP World on a public-private-partnership (PPP) model, could face some initial hitches before kick-starting operations.

Dubai-based DP World, one of the largest marine terminal operators in the world with 49 terminals, is the private operator set to run the terminal at Vallarpadam at Kochi port in India. The port is being developed as a trans-shipment hub on a PPP model. The project involves a total investment of Rs2, 200 crore, with an investment of Rs1,000 crore by the Indian government and Rs1,200 crore by DP World.

The first phase of this terminal was earlier to be commissioned by June 2010. The new date is around July 2010. “The Vallarpadam terminal has been delayed a bit; we are talking of end-July 2010 from the earlier June 2010,” said Anil Singh, senior vice president & managing director (subcontinent), DP World Private Limited.

Mr Singh stated the reason for delay was the movement of equipment that is likely to be completed in this month and thus, the first phase is likely to be commenced by July 2010.

However, another major issue that the terminal could face is the Indian cabotage policy. DP World had requested the government certain changes in the policy in order to make the terminal competitive with international ports. Relaxation in the cabotage policy is expected to bring more trade to Vallarpadam and other major ports in India.

“The recommendation is with the shipping ministry right now. Till now, I don’t hear any new developments on that side,” said Dr Satish Balram Agnihotri, joint director general, department of shipping. Any relaxation in the cabotage policy is likely to receive strong opposition from Indian shipping companies. However, supporters of the Vallarpadam project argue that the relaxation would be a win-win step both for the port and the shipping companies.

Though DP World plans to commission the project in July 2010, operations at the terminal can start only once the necessary contracts are signed with the respective clients. However, the company has not signed any contracts at present, as it is awaiting relaxation in the cabotage policy.

“Yes, that is true (we would sign contracts once the decision on the cabotage policy is taken). We are waiting for the policy and then we can take a position on that (the contracts). We haven’t heard anything from the government,” said Mr Singh.

DP World officials claim that the new trans-shipment hub will help attract around a million tonnes of cargo to India. “This will help bring back India’s cargo from ports like Colombo and Jebel Ali,” said Mr Singh in a presentation made at a Confederation of Indian Industry (CII) conference on coastal shipping, a few months back.




6 years ago

Vallarpadam is a great port, but lacks a large hinterland. This is a benefit ports in Gujarat, Maharashtra, Andhra Pradesh and Orisa have. West Bengal has too much of silt.

Vallarpadam can cater only to South India, which is a smaller market than central, west or north India. Moreover, there will always be competition from Chennai, Krishnapattinam, Virizhnam and Cochin.



In Reply to r.n.bhaskar 6 years ago

Thanks for the comment sir! will keep that in mind!

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