MSCI slams move by Indian exchanges
Ending data feed pacts with global counterparts´ anticompletive´, could cause disruption and lead to a cut inIndia´sweighton global indices, says MSCI
Global index provider MSCI has slammed Indian exchanges´ decision to terminate licensing and datafeed agreements with their global counterparts.MSCI has said the concerted announcement by the three domestic exchanges was “anticompletive” and would restrict access to the Indian market.
It has urged Indian regulators and exchanges to reconsider the move as it could lead to disruption in trading, which could force MSCI to cut India´s weight in its global indices.On February 9, the National Stock Exchange (NSE) and the BSE —India´s two main exchanges —said inajoint release that they were discontinuing their datafeed tieups with foreign exchanges to prevent offshore trading in domestic securities.
The move would come into effect after the contractual notice periods expire in August.“It isaclearly negative development for the accessibility of the Indian equity market for international institutional investors,” said the index provider inarelease, hinting that it might have to cut India´s weight in its global indices.
The leading index provider´s indices, such as the MSCI Emerging Markets (EM) Index, are tracked by global exchangetraded funds (ETFs) with cumulative assets that run into trillions of dollars.Experts saya100basis point reduction in India´s weight by the MSCI in the EM index could lead to outflows of over Rs 1 billion. Currently, India´s weight on the MSCI EM index is about eight per cent, and on the MSCI Asia Pacific (exJapan) index it is 12 per cent.
These help India attract Rs 8 for every Rs 100 getting invested in the MSCI EM index.“Aset of restrictions on the use of traded price data is inconsistent with the practices of any other market in MSCI´s Emerging Markets Index series and could result in an unprecedented disruption of trading in financial products in markets around the world,” the MSCI said.
Earlier, USbased Futures Industry Association,atrade association of exchanges, too had criticised the move by domestic exchanges stating it would "disrupt trading on numerous exchanges around the world and alarm international investors”. The move by Indian exchanges to stop providing realtime data feeds to global exchanges such as the Singapore Exchange (SGX) and the CME group will lead to suspension in trading of equity derivatives based on domestic indices, such as the Nifty, which are very popular on these platforms.
“Given the breadth of the application of the changes referred to in the announcement, we believe that if the changes are put into effect, the result will be disruptive and harmful to international institutional investors in Indian equities whether accessing the market onshore or offshore,” the index provider said. The MSCI is known to limit exposure to countries or securities where there are trading restrictions, lack of accessibility or liquidity for investors.
A case in point being the index provider not including ChinaAshares—traded on the mainland— in its global indices as global investors are not allowed to deal freely in them.“Under MSCI´s Market Classification Framework, anticompetitive measures restricting investors´ access to derived stock exchange information receive a negative score in the Competitive Landscape category,” it further said.
MSCI said the restriction imposed by Indian exchanges could “result inamaterial deterioration of the accessibility of an equity market”.It further said it would review India´s weight after careful consultation with international institutional investors and other market participants.The index provider has urged Indian exchanges and market regulator, the Securities and Exchange Board of India (Sebi), to revoke the decision.
“MSCI strongly suggests the Indian exchanges and their regulator Sebi reconsider this unprecedented anticompetitive action before it leads to any unnecessary disruptions in trading orapotential change in the market classification of the Indian market in the MSCI Indexes,” the global exchange provider warned.
Vikram Limaye, MD &CEO of NSE, had told Business Standard that exchanges would continue to provide data to ETF providers to ensure that flows into India are not impacted.
Indian markets drop 1% even as global equities rally
India´s benchmark equity indices declined nearly one per cent on Friday even as global peers rallied as widening of the current account deficit, the Rs 2billion fraud at Punjab National Bank (PNB) and index provider MSCI´s warning weighed on investor sentiment.The Sensex fell 0.8 per cent to 34,010, while the Nifty50 index fell 0.9 per cent to 10,452.3, its lowest close since January 3. The losses came despite global markets gaining by more thanaper cent as the yield on the 10year US Treasury softened below 2.9 per cent.
Most global markets posted their biggest weekly advance in nearlyayear but Indian equities ended the week unchanged.Mirroring global cues, the Indian markets, too, started with gains, with the Sensex gaining as much as 211 points to 34,297.However, the index succumbed to selling pressure amidaspate of bad news.India´s current account deficit widened the most in four years in January as imports surged and export growth slipped,areport that came after Thursday´s market close showed.
Banking stocks —which haveasignificant weight in the benchmark index —declined as investors feared that the PNB fraud could spread.“The fraud is clearly weighing on investor sentiment.The amount involved is large.Also, there are fears whether this is restricted to just one branch of one bank or many other branches and banks. Just when investors thought the bad asset quality problem was bottoming out for the banking sector,alot of new questions are lingering for investors,” said Rajeev Thakkar, ýchief investment officer, ýPPFAS Mutual Fund.
The Business Standard, New Delhi, 17th February 2018
Ending data feed pacts with global counterparts´ anticompletive´, could cause disruption and lead to a cut inIndia´sweighton global indices, says MSCI
Global index provider MSCI has slammed Indian exchanges´ decision to terminate licensing and datafeed agreements with their global counterparts.MSCI has said the concerted announcement by the three domestic exchanges was “anticompletive” and would restrict access to the Indian market.
It has urged Indian regulators and exchanges to reconsider the move as it could lead to disruption in trading, which could force MSCI to cut India´s weight in its global indices.On February 9, the National Stock Exchange (NSE) and the BSE —India´s two main exchanges —said inajoint release that they were discontinuing their datafeed tieups with foreign exchanges to prevent offshore trading in domestic securities.
The move would come into effect after the contractual notice periods expire in August.“It isaclearly negative development for the accessibility of the Indian equity market for international institutional investors,” said the index provider inarelease, hinting that it might have to cut India´s weight in its global indices.
The leading index provider´s indices, such as the MSCI Emerging Markets (EM) Index, are tracked by global exchangetraded funds (ETFs) with cumulative assets that run into trillions of dollars.Experts saya100basis point reduction in India´s weight by the MSCI in the EM index could lead to outflows of over Rs 1 billion. Currently, India´s weight on the MSCI EM index is about eight per cent, and on the MSCI Asia Pacific (exJapan) index it is 12 per cent.
These help India attract Rs 8 for every Rs 100 getting invested in the MSCI EM index.“Aset of restrictions on the use of traded price data is inconsistent with the practices of any other market in MSCI´s Emerging Markets Index series and could result in an unprecedented disruption of trading in financial products in markets around the world,” the MSCI said.
Earlier, USbased Futures Industry Association,atrade association of exchanges, too had criticised the move by domestic exchanges stating it would "disrupt trading on numerous exchanges around the world and alarm international investors”. The move by Indian exchanges to stop providing realtime data feeds to global exchanges such as the Singapore Exchange (SGX) and the CME group will lead to suspension in trading of equity derivatives based on domestic indices, such as the Nifty, which are very popular on these platforms.
“Given the breadth of the application of the changes referred to in the announcement, we believe that if the changes are put into effect, the result will be disruptive and harmful to international institutional investors in Indian equities whether accessing the market onshore or offshore,” the index provider said. The MSCI is known to limit exposure to countries or securities where there are trading restrictions, lack of accessibility or liquidity for investors.
A case in point being the index provider not including ChinaAshares—traded on the mainland— in its global indices as global investors are not allowed to deal freely in them.“Under MSCI´s Market Classification Framework, anticompetitive measures restricting investors´ access to derived stock exchange information receive a negative score in the Competitive Landscape category,” it further said.
MSCI said the restriction imposed by Indian exchanges could “result inamaterial deterioration of the accessibility of an equity market”.It further said it would review India´s weight after careful consultation with international institutional investors and other market participants.The index provider has urged Indian exchanges and market regulator, the Securities and Exchange Board of India (Sebi), to revoke the decision.
“MSCI strongly suggests the Indian exchanges and their regulator Sebi reconsider this unprecedented anticompetitive action before it leads to any unnecessary disruptions in trading orapotential change in the market classification of the Indian market in the MSCI Indexes,” the global exchange provider warned.
Vikram Limaye, MD &CEO of NSE, had told Business Standard that exchanges would continue to provide data to ETF providers to ensure that flows into India are not impacted.
Indian markets drop 1% even as global equities rally
India´s benchmark equity indices declined nearly one per cent on Friday even as global peers rallied as widening of the current account deficit, the Rs 2billion fraud at Punjab National Bank (PNB) and index provider MSCI´s warning weighed on investor sentiment.The Sensex fell 0.8 per cent to 34,010, while the Nifty50 index fell 0.9 per cent to 10,452.3, its lowest close since January 3. The losses came despite global markets gaining by more thanaper cent as the yield on the 10year US Treasury softened below 2.9 per cent.
Most global markets posted their biggest weekly advance in nearlyayear but Indian equities ended the week unchanged.Mirroring global cues, the Indian markets, too, started with gains, with the Sensex gaining as much as 211 points to 34,297.However, the index succumbed to selling pressure amidaspate of bad news.India´s current account deficit widened the most in four years in January as imports surged and export growth slipped,areport that came after Thursday´s market close showed.
Banking stocks —which haveasignificant weight in the benchmark index —declined as investors feared that the PNB fraud could spread.“The fraud is clearly weighing on investor sentiment.The amount involved is large.Also, there are fears whether this is restricted to just one branch of one bank or many other branches and banks. Just when investors thought the bad asset quality problem was bottoming out for the banking sector,alot of new questions are lingering for investors,” said Rajeev Thakkar, ýchief investment officer, ýPPFAS Mutual Fund.
The Business Standard, New Delhi, 17th February 2018
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