BNP Paribas said to handle half of India’s record MSCI trades

BNP Paribas SA accounted for nearly half of the record $4.2 billion in stock trades linked to MSCI Inc.’s index rebalancing through India’s new closing-auction system, according to people familiar with the matter, a share that put the French lender ahead of its Wall Street peers.

The Paris-based bank executed about 180 billion rupees ($1.9 billion) of trades during Monday’s closing auction, the people said, asking not to be identified because the information is private. The bulk of the transactions were carried out for global institutional investors, including hedge fund giant Millennium Management, they said.

Hedge funds are increasingly using French banks to trade and hold assets in India because the country’s tax treaty with France offers favorable treatment, while similar capital-gains benefits for Mauritius and Singapore have been removed, according to Nehal Sampat, partner at Price Waterhouse & Co LLP.


Representatives for BNP Paribas and Millennium did not reply to Bloomberg’s email seeking comment.

Turnover in the National Stock Exchange’s 20-minute auction session on Aug. 31 was about 33 times the average since the mechanism’s launch on Aug. 3, as investors adjusted portfolios to MSCI’s latest index changes.

Index-rebalancing trades have become an increasingly important business for global hedge funds. Such strategies typically involve anticipating changes that passive funds will be forced to make, building positions ahead of the effective date and seeking to profit when index-tracking flows arrive.

BNP Paribas has been expanding its securities-services franchise in India, where it provides custodial and other services to global funds and institutional clients. The lender has also been bolstering its India presence by setting up operations in GIFT City, the country’s only international hub.