NEW DELHI: A regulatory panel may have voiced concerns over high profits being made by stock exchanges here, but Indian bourses figure among the least profitable entities when compared to their major global peers.
In a move that could make it difficult for corporate entities to set up stock exchanges, a Sebi committee last week recommended that bourses should be stopped from making huge profits and Sebi should put a cap on their profitability.
Industry sources, speaking on condition of anonymity, said the recommendations were good, given the regulatory role that bourses need to undertake, but go against the business philosophy of the entities running or willing to set up stock exchanges.
At the same time, an analysis of financials of leading stock exchanges across the world shows that the profits of Indian bourses are among the lowest. Industry experts said the recommendation to only allow Indian bourses to make reasonable profits looks odd, as their profits are low when compared to their global peers.
The country's largest bourse, the National Stock Exchange , reported a profit after tax of Rs 614 crore for the fiscal ended March, 2010, while its main rival, the BSE, posted a net profit of Rs 232 crore.
In comparison, at least eight major exchanges from across the world reported higher net profits for the financial year than either of the two Indian bourses.
These include the Singapore Exchange (SGX), Spanish bourse BME, Australia's ASX, Nasdaq and NYSE of the US, London Stock Exchange (LSE) and Hong Kong Exchange (HKeX).
Furthermore, the Bursa Malaysia, Johannesburg Stock Exchange (JSE) and Japan's Osaka Securities Exchange also reported higher profits than the BSE, but less than that of NSE.
While SGX's profits stood at Rs 1,100 crore, those of Nasdaq and NYSE Euronext stood at Rs 1,235 crore and Rs 2,435 crore, respectively. LSE earned a profit of Rs 653 crore during the year, while HKeX was among the most profitable at Rs 2,745 crore.
Among the others, Bursa Malaysia earned Rs 260 crore, BME raked in Rs 900 crore, ASX Rs 1,455 crore, JSE Rs 238 crore and Osaka Securities Exchange made a profit of Rs 343 crore.
The profits could not be ascertained for two leading Chinese exchanges, the Shanghai Stock Exchange and Shenzhen Stock Exchange.
In its recommendations for ownership and governance of stock exchanges in India , the Sebi committee said the bourses should endeavor to generate reasonable profits in order to be self-sustaining.
It recommended that Sebi fix a cap on the maximum return that could be earned by the bourses on their net worth and any return or profits above such maximum attributable amount should be used for investor protection purposes.
In a move that could make it difficult for corporate entities to set up stock exchanges, a Sebi committee last week recommended that bourses should be stopped from making huge profits and Sebi should put a cap on their profitability.
Industry sources, speaking on condition of anonymity, said the recommendations were good, given the regulatory role that bourses need to undertake, but go against the business philosophy of the entities running or willing to set up stock exchanges.
At the same time, an analysis of financials of leading stock exchanges across the world shows that the profits of Indian bourses are among the lowest. Industry experts said the recommendation to only allow Indian bourses to make reasonable profits looks odd, as their profits are low when compared to their global peers.
The country's largest bourse, the National Stock Exchange , reported a profit after tax of Rs 614 crore for the fiscal ended March, 2010, while its main rival, the BSE, posted a net profit of Rs 232 crore.
In comparison, at least eight major exchanges from across the world reported higher net profits for the financial year than either of the two Indian bourses.
These include the Singapore Exchange (SGX), Spanish bourse BME, Australia's ASX, Nasdaq and NYSE of the US, London Stock Exchange (LSE) and Hong Kong Exchange (HKeX).
Furthermore, the Bursa Malaysia, Johannesburg Stock Exchange (JSE) and Japan's Osaka Securities Exchange also reported higher profits than the BSE, but less than that of NSE.
While SGX's profits stood at Rs 1,100 crore, those of Nasdaq and NYSE Euronext stood at Rs 1,235 crore and Rs 2,435 crore, respectively. LSE earned a profit of Rs 653 crore during the year, while HKeX was among the most profitable at Rs 2,745 crore.
Among the others, Bursa Malaysia earned Rs 260 crore, BME raked in Rs 900 crore, ASX Rs 1,455 crore, JSE Rs 238 crore and Osaka Securities Exchange made a profit of Rs 343 crore.
The profits could not be ascertained for two leading Chinese exchanges, the Shanghai Stock Exchange and Shenzhen Stock Exchange.
In its recommendations for ownership and governance of stock exchanges in India , the Sebi committee said the bourses should endeavor to generate reasonable profits in order to be self-sustaining.
It recommended that Sebi fix a cap on the maximum return that could be earned by the bourses on their net worth and any return or profits above such maximum attributable amount should be used for investor protection purposes.
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