BSE shares set for best week ever on NSE IPO hopes

BSE Ltd.’s stock in India is poised for its best weekly performance ever as investors bet on a trading boom for the stock exchange operator stemming from a competitor’s potential IPO listing.

Shares of Asia’s oldest stock exchange climbed as much as 9% in Mumbai trading on Friday — extending its weekly gains to about 38% as market participants increasingly speculate about National Stock Exchange of India Ltd.’s IPO filing following an acquittal in a legal tussle with regulators.

If it chooses to sell shares in the public market, NSE will list on BSE’s exchange because rules in India don’t allow self-listing.

“When a company like NSE, worth 3-4 trillion rupees, lists on BSE, it will drive up volumes and improve the latter’s market share,” said Abhay Agarwal, founder and fund manager at Piper Serica Advisors Pvt., adding that NSE could list publicly within the next 12 months.

The public listing of NSE, the world’s largest derivative exchange by contracts traded, has been stalled for years partly because of pending investigations including the one in which it was most recently acquitted. That case involved allegations that the bourse granted unfair market access to some high-frequency trading firms in the early 2010s.

Last week, the Securities and Exchange Board of India cleared the company and some of its former executives of the allegations in the market access case.

Shares of the Mumbai-headquartered BSE rallied about 80% this year, driving up its valuations to over 48 times one-year forward earnings, among the priciest in the world.