MSCI Slams New Anti-Competitive Measures Impacting the Indian Equity Market

Business

oi-Sunil Fernandes

By Sunil Fernandes

Published: Friday, February 16, 2018, 11:41 [IST]

MSCI Inc., a leading provider of research-based indexes and analytics, announced today that it is closely monitoring developments related to the concerted announcement by three Indian stock exchanges, including the two principal exchanges, of the imposition of anti-competitive measures restricting the accessibility of the Indian equity mark.

In their press release, the National Stock Exchange, the Bombay Stock Exchange and the Metropolitan Stock Exchange announced that they will no longer provide stock exchange information to any foreign exchange or trading platform for trading or settling derivatives, and will no longer license or provide market data to any index provider or its licensees for the creation of indexes or derivative financial products based on such indexes that would be traded or settled on a non-Indian exchange or trading platform where the weight of Indian securities in the index is at least 25%.

"In a clearly negative development for the accessibility of the Indian equity market for international institutional investors, the exchanges' announcement made on February 9, 2018 would impose, following the expiration of contractual notice periods, a set of restrictions on the use of traded price data 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," MSCI said.

It is important to note that Indian shares have a 8.4 per cent weightage in the MSCI Emerging Markets index and if the weightage is dropped, it may result in outflows from Foreign Portfolio Investors.

"The introduction of restrictive measures that may result in a material deterioration of the accessibility of an equity market is reviewed carefully by MSCI in consultation with international institutional investors and other market participants and could lead to a change in market classification. As stated above, the breadth of the restrictions announced by the Indian exchanges is unprecedented in any equity market in the MSCI Emerging Markets Index series," it noted.

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