London-listed brokerage group Plus500 announced on Monday that it will acquired Mehta Equities for $20m.
Mehta is an Indian company and has regulatory approval from the Securities and Exchange Board of India.
The company, which was founded in 1995, is also a member of all the major Indian exchanges – National Stock Exchange, the Bombay Stock Exchange, the Multi Commodity Exchange, the Metropolitan Stock Exchange of India and the National Commodity and Derivatives Exchange. Mehta also has a clearing membership with the Indian Clearing Corporation.
The acquisition is part of Plus500’s efforts to expand more into the listed derivatives markets. Last year the company generated 10% of its total revenues from US options and futures trading.
“We are thrilled to announce this acquisition in India, which marks a significant milestone in our global expansion strategy,” said Plus500 CEO David Zruia.
“By combining Plus500’s cutting-edge technology with Mehta’s local presence and expertise, we aim to accelerate growth and unlock new opportunities in this dynamic and fast-growing market.”
Is Plus500 too late for the Indian options boom?
The decision to acquire a company in India is unusual in the CFD industry, with Plus500 the first big player from the sector to try and tap into the market with a locally regulated entity.
But it’s also not that surprising.
India has become the largest market in the world for retail options trading, based on number of contracts traded.
Last year Indians traded over 150bn options contracts. The year before the figure was 85.3bn. By comparison, the figure in the US last year was 12.3bn.
However, the government has been cracking down on options trades this year, with new regulations making it harder to use the derivative contracts for speculation.
Notably, limitations were imposed on cross margining and leverage. Previously, Indian traders could set a stop loss and then trade a contract by only putting down the amount they stood to lose as margin. Now they have to pay the full amount.
Other restrictions include only allowing one weekly expiring contract on indices.
