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BSE eyes most advanced bourse slot

 

Hat Tip: Shivam Bose

Disclosure:I am market making in the shares of Bombay Stock Exchange

Having begun with a humble background of functioning under banyan trees, India’s leading bourse BSE is now eyeing a slot among the world’s most technologically advanced exchanges and is targeting ten-times faster trades on its platform within three years.

Already, the exchange has made significant changes in its technology and has attained a response time of 200 micro-seconds for trades executed on its platform, BSE CEO Ashish Chauhan said.

The aim is to bring the response time further down to 20 micro-seconds within the next three years, Chauhan told PTI in an interview here.

Today 200 micro-seconds of response time puts us in top 5-10 per cent of the exchanges of the world in terms of the ability to give he response time. It is not only about the speed but also about scalability that is the ability to take order, he said.

“Today we are able to handle 500,000 orders in a second at the response time of 200 micro seconds. If you are able to take large orders, your response time should not suffer,” he said, while adding that proper safeguards are also in place to guard against any risks attached with high-speed trading.

Chauhan said: “We have also implemented a framework that ensures that this is lowest cost, but highest in terms of technology. We have used open source software. We have utilised the technology prowess of India to ensure that we are able to get more from the same hardware.

“We also implemented in April 2014 the new technology we had acquired from Deutsche Boerse and in 5-6 months that it has been in practice our number of orders per day has gone up already three times. Earlier it was 12-15 crore orders on best of the days, and today we are recording 40-45 crore orders a day on a regular basis.”

–from DigitalFC

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Ruchir Sharma:What is driving Indian markets?

Also keep in mind that for the last few months I agree with you that Indian politics has played a dominant role in driving this market but there are many other factors at work which have driven the Indian market over time.

One very significant factor has obviously been the state of global risk appetite and of global liquidity and I think that here there is something more concerning in fact at this stage because I know that in India we have been very much lost to the domestic political scene.

Let us not forget that the Indian market over a period of time is still extremely linked to what happens globally, never before in the history of markets have markets been so high five years after recession ended. So, you have asset price inflation across the world and some of that asset price inflation has also helped India and Indian equities do well over the last five years. I agree that lot of the factors have been domestic but some of the asset price inflation has also played a role in lifting assets to a level which is somewhat disconnected from underlying economic reality. That is one big factor we have to keep in mind.-said Ruchir Sharma

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ICICI Pru Life increases its market share by 410 basis points

Disclaimer:I am market making in the shares of ICICI Pru Life

The stock market boom has breathed new life into a few large life insurance companies, thanks mainly to unit-linked insurance plans (Ulips).

Top private life insurers like ICICI Prudential Life, HDFC Life Insurance, Max Life Insurance and a couple of smaller players with a significant number of Ulips in their product baskets have been able to register double-digit growth in individual new business premium during April-August.

On the other hand, PSU behemoth Life Insurance Corporation of India (LIC) has witnessed negative growth in individual business for the same period. According to data available with Financial Chronicle, individual adjusted first-year premium calculated (as per international norms) by taking into account 10 per cent of single premium and 100 per cent of regular premium during April-August was Rs 1,347 crore for ICICI Prudential Life Insurance, up 34 per cent.

During this period, ICICI Prudential Life’s market share increased by 410 basis points. One basis point is one-100th of a per cent. More than 70 per cent of ICICI Prudential Life’s premium comes from Ulips and the rest from traditional products.

Similarly, HDFC Life Insurance had individual new business premium of Rs 855 crore during April-August, a growth of 31 per cent, which improved its market share by 228 basis points to 15.1 per cent. Max Life Insurance clocked a 15 per cent growth in individual first-year premium at Rs 614 crore during this period.

A top official with a large life insurance company said, “A bull run is supporting higher Ulip sales, which could be one reason. The other reason is that people are moving away from gold to financial products. Financial savings ratio as a percentage to GDP has now started to increase. But we need to wait, as these are early days as 60-70 per cent of actual sales of the life insurance industry happen in the second half of FY15.”-from MyDigital

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Ratnakar Bank hires four banks for Rs. 1,200 Crore IPO

Hat Tip: Shivam Bose

 

(Disclosure:I am market making in the shares of Ratnakar Bank)
Ratnakar Bank Ltd (RBL) has appointed four investment banks for its Rs.1,200 crore initial public offer (IPO), which is expected to hit the market before March 2015, three people close to the development said. The bank is expected to file its documents with the market regulator as early as October.

The bank has mandated Kotak Mahindra Capital Co. Ltd, Citigroup Inc., Standard Chartered Plc and Morgan Stanley to handle the issue. Mint had reported on 1 July that the private sector lender plans to dilute about 10% stake through the IPO, which values the bank at Rs.12,000 crore.

 

Though RBL has no immediate requirement for fresh capital, the IPO would help the bank comply with the Reserve Bank of India (RBI) guidelines issued last year that directed all banks to list within three years of starting business.
Over the last three years, global and local private equity and development funds have invested over Rs.1,400 crore in the bank in three tranches. Housing Development Finance Corp. Ltd, Norwest Venture Partners, Samara Capital, Beacon Capital, Faering Capital, TVS Shriram, Cartica Capital, Ascent Capital, Aditya Birla Private Equity, IDFC’s Spice Fund and ICICI’s Emerging India Fund are among its shareholders.
Most investors, however, may continue to stay invested, the person quoted above said. “It is unlikely that any of the existing investors will sell their investments in the bank because none of them have stayed invested for more than three-and-a-half years. Some of the bank’s shareholders are development finance institutions, which typically hold their investments for many years,” he said.

The share sale, if it materialises, will make RBL the 41st publicly traded bank in India. The IPO comes at a time when secondary markets are buoyant and interest in primary markets is starting to pick up.

 

Vinod Wadhwani, director at Ambit Corporate Finance Pte Ltd, expects a robust investor response to the IPO. “Given that most of the public sector banks are reeling under the huge pressure of non-performing loans, investor interest in public sector banks is limited. There is a dearth of new and quality paper supply in the private sector as well. Private sector banks such as Ratnakar Bank, which has a competitive management team in place, is expected to continue its growth trajectory. Hence, the investor response to the IPO is expected to be robust,” Wadhwani said.

 

In an interview with Mint in June, Rajeev Ahuja, head of strategy at the bank, had said that no single investor holds more than 5% in RBL. An IPO will hence mean a further reduction in stakes of existing investors. Besides, it will also give liquidity to employees for their stock options and probably attract more large investors who would want to buy into a listed bank.
As on 31 March, the bank had a loan book of Rs.9,835 crore, according to RBL’s website. In fiscal year 2014, it added 51 branches and a similar number will be added in the current fiscal year, Ahuja had said. As on March 2014, RBL had 185 branches and 350 ATMs with more than 500,000 clients.
Overall, the bank is targeting growth of 40-50% in advances and deposits over the next couple of years, Ahuja said. For the year ended March 2014 the bank’s net advances grew 54% while deposits rose 39%.
from Mint
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BSE expects to list 100 companies on its SME platform

Disclosure:I am market making in the shares of BSE

Leading stock exchange BSE is hopeful of listing a total of 100 companies on its SME platform by December-end after launching the segment for small enterprises more than two years ago.

Currently, 66 companies are listed on BSE’s SME platform having an aggregate market capitalisation of nearly Rs 7,900 crore. These firms raised about Rs 550 crore through initial public offerings (IPOs).

“Basically we’ve got a very good response on SME as in 2 years time we’ve now got 66 companies listed and in next two months 20-25 more companies will get listed so effectively we’ll have 100 companies listed by this year end on the BSE SME platform itself,” BSE managing director and CEO Ashish Kumar Chauhan said at the sidelines of an Assocham event.

Many good companies from areas like manufacturing, metals, information technology and others are coming to list on the BSE’s SME platform, he said.

In March 2012, BSE launched platforms for small and medium enterprises aimed at entities looking to raise equity capital after market regulator Sebi allowed such firms to get listed without an IPO.

It launched an institutional trading platform for this in November 2013. The NSE followed suit in September in the same year when its platform ‘Emerge’ went live.

According to the SME listing norms, a company would be eligible for listing if it has not completed 10 years after incorporation, and its revenue has not exceeded Rs 100 crore in any of the financial years.-from TOI