The Bombay Stock Exchange, Asia’s oldest bourse, said it’s planning to cut trading fees starting Dec. 29 and roll out derivative products to take market share from bigger rival National Stock Exchange of India Ltd.

The Bombay bourse will also build up products that aren’t yet generating revenue and expand its services, said James E. Shapiro, head of market development. The Bombay exchange has 25 percent share of the nation’s equities market, while its competitor has the rest.

The bourse has been trying to wrest market share since the May hiring of Chief Executive Officer Madhu Kannan, the former managing director of global strategy at Bank of America-Merrill Lynch. Kannan, who said June 17 he plans to “fight hard,” attempted to increase the number of trading hours last week to draw investors from its rival.

“The Bombay Stock Exchange had some difficulty in creating liquidity in its equities derivatives segment, so the new management is trying some new things,” Shapiro said in an interview today in Mumbai.

The new products include a derivatives contract backed by the benchmark Bombay Stock Exchange’s Sensitive Index, which started trading this month, Shapiro said.

The key stock gauge has risen 79 percent this year, set for its best annual performance in 18 years. Purchases by global investors have reached $16.8 billion this year, approaching the record $17.2 billion of net inflow into stocks in 2007, the nation’s market regulator said yesterday.

The Bombay bourse, backed by Deutsche Boerse AG and Singapore Exchange Ltd., and the larger National Stock Exchange, partly owned by NYSE Euronext and Goldman Sachs Group Inc., plan to start trading 55 minutes early at 9 a.m. from Jan. 4 to lure traders in Hong Kong and Singapore.

The Bombay exchange first announced a 10-minute extension on Dec. 15. It was followed a day later by the National exchange, which advanced its timings by 55 minutes to 9 a.m. The Bombay bourse matched the extension.

Source: Bloomberg