Thursday, January 11, 2007
NYSE Acquiring Stake in India's National Stock Exchange
The NYSE has announced plans to invest $115 million to acquire a 5% interest in India's National Stock Exchange. See the Dow Jones news blurb here. Other "pedigreed foreign institutions" (the NSE's term) that are investing capital in exchange for 5% stakes are Goldman Sachs, General Atlantic and Softbank Asia's Infrastructure Fund.
The NSE has been around since 1992 and was created after being recommended from a study of new capital markets. The NSE ranks third in the world in the number of equity market trades, number one in equity futures and fourth globally in index futures.
With its English legal system, India has advantages over other developing markets in the corporate governance arena. But it has not developed a reputation for strong enforcement. For those interested in reading about India's corporate governance landscape in more detail, see this paper by Rejesh Chakrabarti or the IFC's report here.
Perhaps as groups like the NYSE and Goldman Sachs take ownership stakes in the NSE, we will see further convergence in corporate governance practices and over time India will develop a capital market that is marked by strong enforcement practices.