The merger between India INX and NSE IX, the two stock exchange arms of BSE and National Stock Exchange operating at the International Financial Services Centre, has been called off, more than a year after talks began.

A BSE spokesperson said the discussions had gone on for a while and the bourse had decided to call off the merger. An email sent to NSE did not get a response.

“The BSE board has not agreed to the merger. Their board went through the proposal in great detail and communicated that they see value in investing in the exchange and growing products. As long as they are ready to invest, we are also fine with the decision,” said K Rajaraman, Chairman, International Financial Services Centres Authority (IFSCA).

During an interaction with businessline last month, Rajaraman had said that merger talks between the exchanges were at an “advanced stage” and NSE IX would continue to function as a singular international exchange in GIFT City post-merger.

The average daily number of contracts traded at India INX fell to 62,000 in FY24 from 706,000 in the previous fiscal. NSE-IX’s total turnover stood at $734.5 billion in FY24, 161 per cent higher than the previous year.

“The Gift City is very, very close to our hearts... We want this exchange (India INX) to flourish and do very well. Yes, we are also taking note of the fact that the volumes are dwindling. We are going to develop our efforts to do whatever best we can,” Sundararaman Ramamurthy, Managing Director and CEO, BSE, said during a recent analyst call.

The rationale for the merger was to have one common exchange at Gift City that would help India take on competition from the rest of the global financial centres. The recent success seen by BSE in reviving derivatives volumes on its main bourse as well as the spate of enabling regulations at Gift IFSC, however, may have promoted a rethink, said market watchers.

Earlier this year, the government permitted the direct listing of Indian companies on Gift IFSC exchanges. Last month, the IFSCA allowed remote trading by foreign stock broking firms on Gift IFSC exchanges, which will help global brokers connect without requiring them to physically relocate to Gift IFSC. Non-bank entities have been allowed to issue offshore derivative instruments.

Industry officials believe that the BSE will have to start from scratch to revive India INX by working on products and marketing, and investing heavily in infrastructure and technology. A lot of key officials are said to have quit the exchange in the past few months. The exchange currently does not have a CEO and lists Mayank Jain, Manager and Chief Financial Officer, and Jay Soni, Chief Regulatory Officer and Company Secretary, under its management team.

India INX, a subsidiary of BSE, was the first international stock exchange to be inaugurated by Prime Minister Narendra Modi at GIFT City in January 2017. A wholly owned subsidiary of the National Stock Exchange, NSE IX, followed soon after and began operations in June 2017.