Securities Transaction Price Index (STPI) Office

Transcript:Securities Transaction Price Index (STPI) Office:
Securities Transaction Price Index (STPI) Office of the Economic Adviser Department of Industrial Policy and Promotion Government of India Background Services sector contributing almost 54% to India’s gross value added growth. Financial services, comprising Banking, Insurance and Securities Markets account for 5.8% of total Gross Value Added in India (CSO, 2017). Indian securities markets performing well as indicated by soaring indices, expansion of market capitalization of the exchanges and assets under management in the mutual funds industry. The Bombay Stock Exchange (BSE) market capitalization to GDP ratio increased from 69.3 per cent in 2015-16 to 80.0 per cent in 2016-17. Similarly at National Stock Exchange (NSE), the ratio increased from 68.0 per cent in 2015-16 to 78.9 per cent in 2016-17. The all-India equity cash segment turnover to GDP ratio increased to 39.9 per cent from 36.4 per cent in 2015-16. The primary objective of the development of STPI will be for deflating the National Accounts of India. Scope of proposed STPI Scope of proposed STPI Primary Market Secondary Market Bonds Mutual Fund Commodities Market Initial Public Offering Stock Derivatives Stock Currency Interest Rate STOCK MARKET Inputs proposed for STPI Inputs proposed for STPI Inputs proposed for STPI Coverage STPI to measure changes Securities Brokerage- buying or selling securities for others on a commission basis. Transaction costs of direct services- trading fees, brokerage charges etc. Depository services - transaction fees, settlement fees, custody fees, pledging fees etc. Specification of the Service There are many price determining characteristics: Type of securities (corporate bonds, municipal bonds, government debt, equities, ETFs, options, futures, etc.) Type and size of clients Nominal value of traded securities Time to maturity (15-year loans, 5-year certificate of deposit) Trading volume etc. Quality Issues For securities brokerage and related services, several quality issues lie in compiling the SPPI. Following are two major issues; Pricing Bundled services: Security brokerage + Advisory for Investment Definition of unit transactions (1) The nominal value of trades securities (2) The number of traded securities (U.S. and Korea) (3) The real value of trade securities (Japan) Weighting Diagram Weights can be calculated using Industry turnover data Revenue generated by the service provider Thank You