Mumbai needs a more robust debt market to prevent violent swings in equities trading
India's markets have long enjoyed a reputation for being well run. But after shares in Mumbai fell 10% in the first 57 seconds on Jan. 22 and regulators halted trading, investors started grousing that India's bourses still have a long way to go before they're on par with the world's leaders. "India has made major strides with market reform, but in finance...it's antediluvian," says Percy S. Mistry, chairman of London consultancy Oxford International Group.
The bond market—or lack thereof—is the core of the problem. Although India has long had the regulatory framework for companies to offer debt, the disclosure requirements are so stringent that few bother. Last year, Indian companies issued bonds equivalent to just 1% of the country's gross domestic product, compared with 112% of GDP in the U.S. and 10% in China, according to Britain's University of Reading.
A BusinessWeek article by Manjeet Kriplani (BusinessWeek India's bureau chief).
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