Mumbai, India – India's oldest stock exchange, BSE Ltd., is actively pursuing discussions with high-frequency trading (HFT) firms and other key market participants. The objective is to encourage increased engagement and liquidity in its recently launched closing auction system (CAS), according to statements from CEO Sundararaman Ramamurthy.
Ramamurthy highlighted on Wednesday that robust liquidity is paramount for the effectiveness of the closing auction mechanism. He noted that, to date, both retail investors and HFT firms have shown limited participation, which has consequently constrained the system's overall liquidity, as reported by Bloomberg.
Strategies for Enhanced Liquidity and Price Discovery
The BSE chief suggested that establishing a common order book across both the BSE and the National Stock Exchange (NSE) could significantly boost participation and liquidity within the closing auction. Such an integration, he believes, would also lead to improved price discovery in the market, according to an interview Ramamurthy gave to television channel Zee Business.
Discussions on Self-Listing Framework
In a related development, Ramamurthy also addressed the potential for exchanges to list their own shares on their respective platforms under a 'permitted to trade' framework. He confirmed that discussions are currently underway with regulatory bodies to ascertain whether such an arrangement would be permissible.
BSE, which is presently listed on its larger competitor, NSE, had previously sought regulatory approval to allow its shares to trade on its own platform via this 'permitted-to-trade' route. However, that request was not granted, Ramamurthy stated.
Recent Share Performance
Amid these ongoing discussions, BSE shares experienced a decline of up to 3.4% on Wednesday, placing the stock on track for its lowest closing value since April 7. Over the past month, the company's shares have fallen approximately 14%, reflecting sustained market pressure.