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Nasdaq OMX ‘closes’ India liaison office

Nasdaq OMX, the transatlantic exchange, has closed its liaison office in India, people familiar with the matter have said. The move comes after failing to list any Indian company on its New York-based exchange since it set up a presence in Bangalore, the country’s information technology hub, in 2001.

One of India’s most senior IT executives, who asked not to be named, said: “Nasdaq has done a lot in terms of educating companies in India but it has been very difficult for them to list companies on their US exchange and therefore it made no sense to keep an office open here”.

Indian IT companies, which contribute to about 25 per cent of the country’s total exports, generating $46.3bn (€32.7bn £27.7bn) in revenues last year, have boomed in the last 10 years providing vital software and back-office services to US and European multinationals.

Nasdaq has been competing aggressively for global listings. However, Kiran Karnik, former president of Nasscom, the Indian software trade body, said the global financial crisis and high regulatory costs in the US had been strong deterrents for Indian groups looking at the US.

He said: “The regulatory environment in the US was perceived [by Indians] as being very high in terms of compliance costs,”.

“I know some companies – that I wouldn’t want to name – who were looking at US alternatives but then decided to list on the London Stock Exchange.”

Ghanshyam Dass, who was appointed Nasdaq OMX’s director for South Asia in 2001, based at the Bangalore liaison office, said he resigned in March this year. He was not replaced locally.

Richard Dour, Nasdaq’s general manager for south Asia, is based outside India. The US exchange group has denied closing its liaison office in Bangalore.

Nasdaq OMX officials in New York, said last week: “Nasdaq OMX has not closed its representative office in India. In fact, Nasdaq OMX’s presence in India is increasing, with multiple representatives serving the region.”

The official added later: “We do not have, nor have we ever had, a physical office in Bangalore – it has always been individual representatives.”

However, in 2001, Nasdaq said in a statement on the company’s website that it had opened an office in Bangalore to service Indian companies. S.M. Krishna, Indian foreign minister and former chief minister of Karnataka, the south Indian state where Bangalore is situated, inaugurated Nasdaq’s liaison office in 2001.

In the eight years Nasdaq was present on the ground, no Indian company was listed on its stock exchange, according to Dealogic and the Nasdaq’s website.

Exchange experts said that there were very few incentives and many regulatory bottle necks for Indian companies to list in the US.

“Indian companies have found cheaper options in raising debt [through] instruments like foreign currency convertible bonds,” said an executive from a local Mumbai-based exchange.

Source: FT, 02.08.2009 by By James Fontanella-Khan and Varun Sood in Mumbai

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