MSEI backers uncertain after new rule

Size matters MSEI will have to battle NSE or BSE for market share.

- Ram Sahgal, T. Surendar & Neha Joshi

Broking firms and their founders who backed Metropolitan Stock Exchange of India (MSEI) are uncertain about the fate of their investments after the market regulator limited the weekly expiry of index options to two days, according to executives at two of the four companies.

However, these investors have no immediate plan to divest their stakes in MSEI, the executives said on the condition of anonymity.

Groww's parent Billionbrains Garage Ventures Pvt; Rainmatter Investments, backed by the Kamath brothers of Zerodha; Share India Securities Ltd; and Securocorp Securities India Pvt Ltd had purchased a combined 19.84% stake in the exchange for ₹238 crore on 24 December last year.

The investments were made before Sebi's consultation paper of 27 March seeking public comments on its proposal to limit the weekly option expiry days. On 26 May, Sebi's circular—titled Final Settlement Day (Expiry Day) for Equity Derivatives Contracts—curtailed the expiries for hugely popular index options to Tuesday and Thursday every week.

The investors purchased the stake assuming that Sebi would let each exchange launch index options on one day of their choice every week, per a October circular last year, the executives quoted earlier said.