Indian exchanges need to diversify revenue beyond trading for next growth phase: Kotak
Global exchanges have built recurring income streams through technology and data services, offering Indian market operators opportunities to broaden their businesses
Indian stock exchanges require diversification of revenue beyond trading to sustain long-term growth, according to a report by Kotak Institutional Equities. While Indian exchanges boast strong liquidity, high operating leverage and significant growth potential, they remain heavily reliant on transaction-based income, leaving them vulnerable to regulatory changes and fluctuations in trading activity.
In contrast, global exchanges have successfully diversified their offerings, including clearing, indices, data analytics, connectivity and technology services. This diversification has provided global exchanges with more predictable and recurring revenue streams, reducing their dependence on trading volumes. Despite their financial strengths, Indian exchanges still lag behind global peers in terms of diversification, presenting ample opportunities for expansion into new business areas.
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