Investor Presentation

March 2017
Board & Management Team

Board Members Management Team

Prof. Mrs. Ashima Goyal: Mr. Udai Kumar: MD & CEO

Chairperson & PID
Professor at the IGIDR
Mr. Dilip Gopal Patwardhan:
PID
Former Chief Executive of Fedai
Mr. Abhijit Chakraborty:
COO Strategy & Development
Dr. A Sebastian:
COO Market Operations

Mr. Dinesh K. Mehrotra: Mr. Devanshu Desai:

PID Head, Technology
Former Chairman LIC of India
Ms. Sripriya Senthilkumar:
Mr. Udai Kumar: Head, Membership
MD & CEO,
Metropolitan Stock Exchange of India Mr. Chetan Utture: CFO

No single promoter entity.

Professionally managed company with diversified shareholding and a supervised Board.
Shareholding Pattern (December 31, 2016)

Banks / FIs - 27.27% Corporate 32.70% Individuals - 35.44% Others 4.60%

Major Shareholders

State Bank of India 4.06% MCX Ltd 13.82% Mr. Radhakrishnan Damani 4.94%

Union Bank of India 3.02% Trust Capital 4.96% Mr. Rakesh Jhunjhunwala 4.96%

IFCI 2.99% IL & FS 4.96% Mr. Nemish S Shah 4.06%

Bank of Baroda 2.33% AADI Financial 4.06% Mr. Viral Parikh 4.04%

Punjab National Bank 2.08% Edelweiss 2.38% Mr. Kalparaj Dharamshi 3.88%

Bank of India 2.08% Mr. Mainak Mehta 3.70%

Allahabad Bank 2.08% Mr. Dhanesh Shah 3.33%

Axis Bank 1.25% Mr. Harshil Kothari 2.88%

Well diversified shareholding with reputed institutions and individuals.

Current Product Offerings

Interest Rate Futures

Equity Gold Bonds
Currency Futures Liquid and efficient books in
All 6 tranches of
9 GOI Bonds with 1,400+ companies
In USDINR, GBPINR, available for trading Sovereign gold
maturity buckets of 6 years,
EURINR, JPYINR and Equity Index SX 40 bonds issued by
10 years and 13 years.
RBI

Currency Options ETFs Debt

Options contracts in 50 ETFs 285 corporate bonds available for trading.

USD/INR is already in available for 3,240 corporate bonds available on the deal
place. trading reporting platform.
SEBI approval for option
contracts in GBP, EUR and
JPY is awaited
SWOT Analysis
Strengths
Only 3rd National Stock Exchange.
High entry barrier as regulatory approvals for
stock exchanges is rare.
High operating leverage.
All infrastructure cost already sunk.
SEBI license to operate in equity, derivatives,
currency, debt and SME trading in place
Zero debt. IT rebate against Rs.350cr
accumulated losses
Weaknesses
Dormant segments other than Currency
Low liquidity in major segments
Negative perception about erstwhile promoter
New Brand MSEI not yet established
Opportunities
Domestic exchange industry dominated by
one player and two segments
Non equity products Debt, Currency,
Start up trading, IRFs have higher growth
potential and lesser competition.
Opportunity to be the category innovator for
non equity segments and gain share in equity
derivatives
Regulatory support for development of these
categories
Threats
Commodity exchanges entering stock
exchange product categories
SEBI approvals needed for new product
launches
Exchange Industry Landscape

Market Segment Trading Competitive Landscape Opportunity

Share

Equity Derivatives 75% Largest product segment. Dominated by one Exchange can create own products. Revenue pie
player with 99% market share. Liquidity creation is is biggest
a challenge in existing products

Equity Cash 8% Dominated by one player with 95% market share. Revenue potential medium. Value proposition
Lack of value proposition for Corporate Listings limited.

Currency Derivatives 10% Oligopolistic industry structure. Regulatory control Relaxation in OI norms. Cross Currency, Weekly
maximum. Product differentiation not possible. Options

IRFs 0.5% Nascent stage of growth. No dominant player in Banks, Corporate, MFs and Insurance companies
India. Is the largest traded product globally. can use IRFs to protect their bond portfolios.

Corp Bond Trading 3% Equal market share between players. Penetration More than INR 6 lac crore of annual bond
low. issuances. Growing at 15%-20%.

G-Secs 3.5% Banks with their SGL structure are a roadblock. Savings bonds are an opportunity

ETFs -- Currently low product differentiation . Passive Commodity ETFs, Debt ETFs
products.

Start Up Trading -- No exchange traded platform currently available Start Up eco-system for listing, fund raising and
trading
MSEI Product Positioning

MSEIs value proposition is to

develop the Fixed Income Corporate Bond
market and Start Up Trading
eco-system in India.
Trading/Book
Building
The core value proposition will be
complemented by differentiated IRFs
offerings in Equity Derivatives,
Equity Cash and Currency G-Sec Trading
Derivatives.
Market Size and Potential

Total outstanding Corporate Bonds at INR 27,21,000 Cr

Annual issuance of INR 6,00,000 Cr
0.5x churn leads to market size of 13,60,600 Cr
Fixed Income Total outstanding G-Sec is INR 79,00,000 Cr
Annual Issuance of INR 5,82,000 Cr
Muni Bonds and Savings Bonds are planned
0.5x churn leads to market size of INR 39,26,000 Cr

Total outstanding Bonds INR 10,621,000 Cr

IRFs
At 3x churn the potential market size is INR 31,863,000 Cr

Average daily trading volume is INR 272,023 Cr

Equity Derivatives Only two products
Opportunity to garner healthy market share with new products
Annual trading volume of INR 167,994 Cr
Equity Block Deals
MSEI best platform for equity blocks
Increase in Open Interest limits, Cross Currency Contracts, Direct access to FPIs,
Currency
Weekly Options Current are new opportunities. Daily average volume of INR 35,088 Cr
Derivatives
estimated to increase at a CAGR of 15% over 5 years

More than 30000 startups in India. 15% of them are viable 4500. Listing fee and
Start Ups
transaction charges are attractive opportunities
Strategic Thrusts

Latency/
Members Trading
Software

Liquidity

Brand Products
Strategic Thrusts

Ease of Operations

Technology
The entire eco-system of latency,
brokers connectivity, trading
applications is being revamped
Operational ease for membership
processes, margin requirements,
trading and surveillance, clearing and
settlement is being revamped.

All these to
Brand
Products
lead to
Defining Brand Identity, improved
Launching products in Debt in Apr/May. Establishing service markers
Equity Derivatives in Sep/Oct. followed by Branding campaign liquidity in
launch in Apr/May.
IRF and Currency ramp up from March onwards. trading
Equity Block deals in Mar/Apr. segments.
Business Plan Roadmap

Phase One Phase Two Phase Three

FY 18 onwards FY 19 onwards FY 21 onwards

Currency Start Ups/ Structured

Derivatives SME Trading Products
Equity Currency Indices ETFs
(Bulk/Block Deals)
Muni Bonds/
Equity Index Savings Bonds
Futures
Bonds/IRFs
Business Plan Roadmap Phase One

Currency Derivatives
Favourable Regulatory Environment Our Strategy

Relaxing of earlier curbs by RBI: New product launches

Banks have been permitted to have Open Interest of up to Introducing differentiated
USD 1 bn on each exchange from USD 100 mn earlier product features
Primary Dealers have been allowed to participate in the Infrastructure support to
ETCD segment members for business
promotion
Cross Currencies with extended market timing
RBI has permitted recognized stock exchanges to introduce
cross-currency futures and options contracts on EUR-USD, GBP-
USD and USD-JPY. This can lead to increasing of market volume
by 20-30%
It has also permitted recognized stock exchanges to introduce
currency options on EUR-INR, GBP-INR and JPY-INR currency
pairs. The Exchanges are awaiting approval of the securities
market regulator in this regard
Currency Index
Business Plan Roadmap Phase One

Interest Rate Derivatives

Opportunities for the Indian Market Our Strategy

Globally interest rate derivative contracts have highest trading Introducing contracts for
volume. Early stage of growth in India. different tenures to build up the
yield curve
Outstanding size of corporate and government bonds is
INR.10,62,1000 cr. Launch Spread Trades in IRF
IRF can be used for hedging these portfolio. to boost market volume [low
margin, low risk / moderate
A 3x churn of the bond portfolio could lead to a market size of INR
reward trades with opportunity
31,86,3000 Cr
to trade on the yield curve]
Promote hedging of Bond
portfolios through IRFs
Introduce interest rate options
Business Plan Roadmap Phase One

Equity Block Deals

Opportunity Our Strategy

Annual market volume of Bulk/Block Deals is over INR2,000,00cr De-linking trade margin from
settlement funds
MSEIs platform is ideal for equity bulk and block deals as it
provides most efficient execution in terms of price negotiation and Exchanges permitted to trade
100% quantity execution category has 1400+ stocks
comprising 90% of the market
This caters to specific needs of institutional investors and brokers
volume
and fills an important market gap
Lowest transaction charges for
equity trades
Business Plan Roadmap Phase One

Debt Trading
Opportunity Our Strategy

Government actively promoting Corporate bond, G-Secs, Targeting primary issuances

Municipal bonds and Savings bonds from mid tier corporate and
their subsequent trading in the
Market making in debt segment allowed
secondary market
Direct participation by FPIs allowed in debt segments. Retail
Tie ups with large issuers and
participation encouraged through Savings Bonds
arrangers
Corporate bond Issuance size more than Rs. 6 lakh crore annually
Promoting anonymous deal
reporting platform to facilitate
greater participation from
Mutual funds and Corporate
Use the network of brokers and
corporate members to promote
trading in Savings bonds
Business Plan Roadmap Phase One

Equity Index Futures & Options

Opportunity Our Strategy

Equity Indices is the largest segment of exchange volume in India Develop indices which fill the
with nearly 75% of total exchange volumes gaps in the market
Only 2 indices garnering 95% of segment volume, which provides Launch derivative contracts
scope for new product development linked to the indices
Monopolistic market share of the leader at 99%, provides an Tie up with International
opportunity to new entrant with right products agency for creation and
maintenance
Existing 530 composite members provide a ready to go market
Subsequently, these indices
shall be the base for launching
ETFs linked to these Indices
Risk Factors and Mitigants
Exchange needs to maintain continuous
net worth of Rs.100cr as per SEBI
formula. Since MSEI is estimated to incur
losses till FY19, net worth may fall short of
regulatory requirement.
SEBI approvals are required for new
product approvals or creating a
differentiated service offering vis--vis
competition. Delay or rejections could
impact business estimates
Exchange has successfully raised equity
capital in the past and is actively engaging
with new investors for raising equity
capital in next six months.
Identifying product and service gaps in the
market, researched product inputs from
external and independent bodies and
active engagement with regulator on
product need shall be our approach.
Risk Factors and Mitigants

ECM is not MSEIs focus segment. For

Commodity exchanges may be given
Equity derivatives, MSEI shall develop IPR
permission to enter equity segments in
and unique products which shall be
future.
competition immune.

The enquiry is against the individual

promoter, not against MSEI. Moreover,
CBI enquiry against erstwhile promoter. MSEI has been securing annual renewal
of its license based on annual SEBI audit
after meeting all regulatory norms.
Financial Turnaround Round the Corner

90.00 Year PAT (Rs Cr)

60.00 FY13 21.42
30.00 FY14 (154.53)
- FY15 (60.12)
(30.00)
FY16 (40.47)
(60.00)
FY17 E (33.60)
(90.00)
FY18 E (23.65)
(120.00)
FY19 E 0.37
(150.00)
(180.00)
FY20 E 17.84
FY13 FY14 FY15 FY16 FY17 E FY18 E FY19 E FY20 E FY21 E FY22 E FY21 E 35.12
PAT (Rs Cr) FY22 E 60.30
 Financial Projections

Rs Cr
FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22
Particulars
Audited Audited Audited Estimated Estimated Estimated Estimated Estimated Estimated
Operating Income 91.08 34.02 21.75 20.94 35.82 59.63 82.13 105.59 136.12
Investment Income 18.75 10.49 7.37 5.70 6.45 7.91 9.66 12.69 17.51
Other 1.72 0.70 2.89 6.83 3.02 3.32 3.65 4.01 4.41
Total Revenue 111.56 45.21 32.01 33.46 45.29 70.86 95.43 122.29 158.05
Operating Expenses 188.08 90.97 57.87 49.18 49.88 51.31 58.96 67.18 76.19
Finance Costs 0.05 0.01 0.25 0.26 0.05 0.05 0.05 0.05 0.05
Business Promotion 55.79 0.11 0.36 3.64 4.00 5.08 6.18 7.35 8.45
Depreciation 22.17 14.24 13.99 13.97 15.00 14.05 12.41 12.59 13.06
Total Expenses 266.09 105.34 72.47 67.06 68.94 70.49 77.59 87.17 97.75
Profit/(Loss) (154.53) (60.12) (40.47) (33.60) (23.65) 0.37 17.84 35.12 60.30
Shareholders Fund 266.93 186.31 206.61 185.92 197.27 197.64 215.48 250.60 310.90
 Statement of Assets and Liabilities

Particulars (Rs Cr) FY14 FY15 FY16 FY17 E FY18 E FY19 E FY20 E FY21 E FY22 E

Equity and Liabilities

Share Capital 53.93 115.83 194.17 248.32 283.66 283.66 283.66 283.66 283.66
Reserves and Surplus 66.17 11.32 (29.15) (62.74) (86.39) (86.02) (68.18) (33.06) 27.24

Non Refundable Interest Free Deposits 119.66 59.16 41.59 - - - - - -

Share Application Money Pending
Allotment 27.17 - - 0.34 - - - - -
Share holders funds 266.93 186.31 206.61 185.92 197.27 197.64 215.48 250.60 310.90

Non-Current Liabilities 13.86 4.58 46.79 37.91 40.50 45.53 50.57 55.62 60.67
Current Liabilities 85.33 79.59 43.07 60.15 55.16 52.74 51.77 50.98 50.51

Total 366.12 270.48 296.48 283.97 292.93 295.91 317.81 357.21 422.08
Assets
Fixed Assets 92.89 83.13 69.86 65.00 55.00 45.95 38.54 30.95 22.90
Investments in subsidiary 12.80 12.79 57.79 81.59 81.59 81.59 81.59 81.59 81.59
Long term Loans and Advances 66.38 63.92 55.07 57.62 51.86 45.64 42.22 36.57 27.70
Cash & Cash Equivalents 158.17 91.96 76.79 73.95 97.22 114.52 145.82 196.20 274.45
Other Current Assets 35.88 18.68 36.98 5.81 7.26 8.20 9.63 11.90 15.44

Total 366.12 270.48 296.48 283.97 292.93 295.91 317.81 357.21 422.08
MSEIs Subsidiary MCCIL

MSEI has 86.94% stake in subsidiary

Metropolitan Clearing Corporation of India Ltd (MCCIL),
which is the qualified central counter party for all trades on the exchange

Role of MCCIL MCCIL Credentials

Provides novation No defaults and delays in

settlements since inception
Acts as central counter party for all
trades on MSEI SEBI recognition and QCCP status

Multilateral netting Processes benchmarked as per

Interface with Clearing banks,
Clearing members and Custodians
IOSCO PFMI. Applied to ESMA for
third country CCP.
ISO 9001:2008 & ISO/IEC
27001:2013. Unique Risk Controls
MCCIL Business Opportunities

Business Proposition Business Opportunity

Clearing Members who clears
and settle deals entered by the
affiliated trading members.

Clearing Banks to effect the transfer of funds

Members between the clearing members and the CC.
Multi Exchange
Approved Banks for issuing FDRs
Banks and BGs to the members. Clearing

Operate Clearing
Interoperability
MCCIL Custodians
For custody of collaterals
For settlement of institutional deals
Ecosystem

OTC Clearing
Depository
NSDL
RBI
CDSL
RTGS/NDS

RTGS for funds leg

settlement of OTC deals
NDS/e-Kuber for G-Secs
MCCIL Financials

Rs Cr

FY 14 FY 15 FY16 9M FY17

Operating Revenue 32.18 14.80 10.21 2.89

Other Income 5.28 2.71 3.12 3.68
Total Income 37.46 17.51 13.33 6.57
Employee benefits expense 4.00 3.13 2.17 1.54
Other expenses 33.25 12.85 10.31 3.88
Less: Depreciation and amortization expense 0.08 0.16 0.11 0.02
Total Expenses 37.33 16.14 12.59 5.44
PBT 0.13 1.38 0.74 1.13
MCCIL Balance Sheet
Rs Cr

FY 14 FY 15 FY16 9M FY17

Equity and Liabilities

Share Capital 25.00 25.00 70.00 93.81
Reserve & Surplus 3.19 4.56 5.30 6.43
Shareholders Funds 28.19 29.56 75.30 100.24
Non-current Liabilities 32.77 34.42 36.34 38.43
Current Liabilities 67.82 51.20 49.60 42.26
Total 128.80 115.20 161.20 180.92
Assets
Fixed Assets 0.43 0.18 0.06 0.05
Long term loans and advances 5.76 7.66 9.29 29.64
Cash & Cash equivalent 115.30 102.40 145.10 139.84
Short term loans and advances 2.82 2.81 3.11 7.80
Other current assets 4.51 2.14 3.68 3.60
Total 128.80 115.20 161.20 180.92
 Inviting your participation in
Creating an Alternative Financial Market in India.