August 08, 2013

Press Release No. 1

NSE holds conference on Exchange traded funds and PSU ETF in Jaipur

Jaipur, 8^th August, 2013: The National Stock exchange (NSE) today organised a conference, in Jaipur, on exchange traded funds (ETF’s) and its advantages as an asset class. The conference was held in the backdrop of the government’s recent announcement, to soon launch an exchange traded fund, of prominent public sector company stocks. NSE and the government are keen to create awareness on exchange traded funds, its advantages for investors as well as on the unique qualities of the CPSE (central public sector enterprises) ETF. A similar conference was held in Mumbai on 29^th June.

The keynote address was delivered by Mr. Ravi Mathur, disinvestment secretary, Ministry of Finance, while the opening remarks were given by Mr. Ravi Varanasi, Chief Business Development, NSE. Joint secretary in the disinvestment department, Mr. Alok Tandon was also present at the conference.

The session was also addressed by Mr. Sanjiv Shah, Co CEO, Goldman Sachs Asset Management Pvt. Ltd and Mr. Vineet Arora, Executive Vice President, ICICI Securities. The conference was attended by a large number of market participants.

ICICI Securities has been appointed as the advisor to assist and advise the government in launching the CPSE ETF, while Goldman Sachs Asset Management has been appointed as the asset management company, to act as provider for the proposed CPSE-ETF offering.

NSE and the government have been conducting joint sessions on ETF’s and the PSU ETF and taking feedback from market participants on different aspects of the PSU ETF , including composition of the basket, the discount or loyalty bonuses as well as the timing of the launch.

Exchange traded funds have grown tremendously in the last few years and there has been a three-fold increase in assets under management in India, from 425 million dollars three years ago to 2.13 billion dollars. NSE has been conducting many campaigns and seminars to create awareness on the advantages of ETF’s.

The CPSE-ETF will consist of listed CPSE stocks, which have had a strong performance. It will be a low cost, low risk and well diversified equity product, which will encourage retail investors to come and invest in an equity based product with very low risk and at a very low cost. It will give them an opportunity to buy a low cost product that represents a combination of various blue chip public sector companies across sectors, thereby providing healthy diversification while minimizing concentration risks.

Disinvestment secretary Mr. Ravi Mathur said, “There will be attractive discounts at the time of issue as well as loyalty bonus to the retail investor, to encourage all classes of investors, especially retail investors to invest in this product.”

In the last budget, STT (securities transaction tax) for trading in exchange traded funds was reduced substantially, to bring more retail investors to participate.

Internationally, the ETF market is as large as 2000 billion dollars and since the 2008 Lehman crisis, is one of the best asset classes to perform. With more awareness on the unique benefits of ETF’s, the Indian market for the asset class can also grow manifold.

Mr. Ravi Varanasi, Chief Business Development, NSE said, “In the last three years, ETF products have tripled their AUM’s in equity and debt based ETF’s. We look at building CPSE ETF in the same way, and with the same amount of commitment in  increasing awareness and ultimately bringing the retail investor in this product class.’’

An investor can buy or sell ETF’s on a transparent exchange platform, at any point of time in the market hours, unlike an active mutual fund. ETF’s are cost effective and the STT (securities transaction tax) and managing fees are low. Nifty ETF for instance is a product in which investors can invest in small amounts and diversify their risk to build a mini portfolio, instead of buying individual stocks.

An Exchange Traded Fund (ETF) is an investment fund that is traded on a stock exchange, just like stocks. An ETF holds assets such as stocks, commodities or bonds and trades around its net asset value (NAV) over the course of the trading day. Most ETFs track an index, such as a stock index or bond index. ETFs are an attractive investment, because of their low costs, tax efficiency and stock-like features.

On NSE, ETF’s are available on the CNX Nifty index, on the PSU bank index, CNX 100, Junior Nifty and Bank Nifty, gold as well as international indices like NASDAQ 100 and Hang Seng index.

There has been a lot of trading interest from Jaipur over the years and NSE has established a Mini point of presence in the city, to reduce last mile leased line costs to member brokers. In the absence of the Jaipur Mini pop, members used to connect directly to the Delhi point of presence and pay much higher costs. But now through the Jaipur Mini pop, they can connect directly to this Mini POP and instead of paying nearly 7 lakh rupees a year, can pay just 30,000 rupees for the annual leased line.

Press Release No. 2

News about Tilaknagar Industries Limited

The media had reports that the company is in talks to sell stake to one of the global giant.

The Exchange, in order to verify the accuracy or otherwise of the information reported in the media and to inform the market place so that the interest of the investors is safeguarded, had written to the company.

Tilaknagar Industries Limited has vide its letter inter-alia stated, "Given the nature of its business, sector dynamics and to make business progress, the Company at several time points is exploring various types of business associations, tie-ups, relationships, etc. across players in the domestic and international markets, which may or may not fructify. Should there be any development that requires us by law to make any statement in any manner in connection with any such activity that may transpire, you may rest assured that the Company will comply, and share and make the appropriate announcements in line with the best practices disclosure guidelines."