French custodian BNP Paribas Securities Services has launched a local clearing and custody service in India, for cash equities and corporate debt instruments.
The firm is keen to increase its presence in the Indian asset servicing market, as well as to expand its global network.
“We think India is one of the most exciting and dynamic markets in the world, and we are pleased to extend the same high quality service to both domestic and off-shore investors here, as we do in the rest of the world,” said Pierre-Alexandre Thome, head of BNP Paribas Securities Services, in Mumbai.
Clearing fees in the country have been the source of some debate. The primary market in India, the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) are vertically integrated exchanges that own stakes in both clearing and settlement facilities.
Although competition and interoperability has been arranged between the central securities depositories the Central Depository Services (India), which is partly owned by the BSE, and National Securities Depository, which the NSE has a stake in, there are no similar arrangements between the BSE’s Bank of India Shareholding and the NSE’s National Securities Clearing Corporation.
The market's high post-trade fees have restricted the ability of buy-side and sell-side firms to use smart order routing (SOR) to improve execution quality.
It had been hoped that regulators might re-examine interoperability in order to support the introduction of SOR however a lack of consensus on the issue, which has also dogged similar arrangements in Europe, is likely to prevent any decision being made in the short-term.