To tackle competition from the MCX Stock Exchange (MCX-SX), the Bombay Stock Exchange (BSE) is widening its product basket. The exchange is set to launch a new product that would allow systematic investment plans (SIPs) through its platform. The move is aimed at attracting retail investors. BSE officials said the exchange would soon announce the operational details and the date of launching the SIP product.

BSE’s two new derivative offerings, the BSE 100 and the cash-future spread (CFS), would be launched in the first week of August, said an official. This follows the Sensex derivatives witnessing trading interest, owing to the market-making scheme. The BSE would also put both the CFS and the BSE 100 under the market-making scheme..

SIP investments in mutual funds have risen in the past few years due to poor market conditions.

However, BSE officials claim retail participants would find its new product easy to understand and the cost of investing, too, would be lower than those for alternatives.

While its market-making scheme for the Sensex derivative would end on July 31, the exchange is banking on BSE 100 derivatives and the CFS to further enhance trading interest in its futures and options. The BSE 100 index is being pitched against the National Stock Exchange’s Nifty index. The CFS has features similar to trading strategies used by brokers in the early 90s.

This week, BSE’s derivative turnover crossed Rs 1 lakh crore. The exchange spent about Rs 60 crore on market making in eight months. Officials say their daily outgo of incentives is capped, and only a fourth of the total volume is being generated through various incentive schemes.

Source: Business Standard

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