BSE Shares Slip 2.5% from Day's High: Why NSE's Cross-Trading Plan Triggered a Sell-Off
BSE shares came under pressure after NSE proposed allowing its shares to trade on its own platform under the “Permitted to Trade” category after listing.
Shares of BSE fell 2.5% from their day’s high on August 20 following reports that the National Stock Exchange (NSE) plans to allow its shares to trade on its own platform under the "permitted to trade" category post-listing. If approved by SEBI, this move could split trading volumes and dilute projected revenue gains for BSE.
On 20 Aug, BSE shares dropped 2.5% from the day's high and traded nearly 1.0% lower after the report emerged. The report revealed a key development regarding the National Stock Exchange’s (NSE) upcoming mega-IPO.
The proposed move could shift trading volumes away from BSE, impacting investor sentiment around exchange stocks.
NSE expects SEBI approval for its draft prospectus by late August, targeting an IPO launch in the second half of September.
What is the new proposal discussed by NSE?
Under current Indian market regulations, a stock exchange cannot list its shares on its own trading platform (self-listing). Because of this rule, NSE must formally list its shares on its rival exchange, BSE Ltd.
However, during recent investor roadshows for its upcoming IPO, NSE discussed a mechanism where its shares would formally list on BSE, but simultaneously trade on the NSE platform under the "Permitted to Trade" category, subject to approval from SEBI.
What is the "Permitted to Trade" category?
The "Permitted to Trade" route allows certain securities to be actively bought and sold on the NSE even if they are formally listed on another recognized exchange like BSE:
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It gives investors access to liquidity across both exchanges while keeping BSE as the official primary listing venue.
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Around 250 companies, including Goodyear India, Novartis India, and Elantas Beck India, already trade on NSE under this framework.
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NSE changed its index rules in 2019, allowing “permitted to trade” stocks to be included in Nifty indices. This could eventually allow NSE shares to become part of major indices such as the Nifty 50.
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Conclusion: Why did BSE shares drop on this news?
Market participants had expected that all post-listing trading volumes, transaction fees, and clearing activities for NSE’s upcoming mega-IPO would flow exclusively through BSE.
If SEBI approves NSE's proposal, a large portion of that projected trading volume and liquidity will shift back to the NSE platform, reducing the anticipated revenue windfall for BSE.
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