June 29, 2013

Press Release No. 1

NSE organises conference on ‘New frontiers in exchange traded funds’

Mumbai, 29^th June, 2013: The National Stock exchange today organised a conference, in Mumbai, on exchange traded funds and its advantages as an asset class. The keynote address was delivered by Disinvestment Secretary, Mr. Ravi Mathur. NSE MD and CEO, Ms. Chitra Ramkrishna gave the welcome address. Mr. Alok Tandon, Joint Secretary, Ministry of Finance was also present on the occasion. The session was also addressed by Mr Sanjiv Shah, Co CEO, Goldman Sachs Asset Management Pvt. Ltd and Mr. Anup Bagchi MD and CEO of ICICI securities.

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 government is keen on creating awareness on the PSU ETF, before its launch among market participants and is actively conducting sessions with different stakeholders to take market feedback.

The PSU ETF index will have shares of healthy PSU stocks, as underlying. The PSU ETF will be a low cost, low risk and well diversified equity product, which will encourage retail investors to come and invest in equity based product with very low risk and at a very low cost.

Mr Ravi Mathur said, “There will be attractive discounts at the time of issue as well as loyalty bonus to the retail investor.”

In the last budget, STT 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.

Ms. Chitra Ramkrishna said, “In the last three years, ETF products have tripled their AUM’s in equity and debt based ETF’s. We look at building PSU 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; the STT 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.

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.