The governing boards of the Bombay Stock exchange (BSE) and Delhi Stock Exchange (DSE) association would appoint an independent valuer to determine the net worth of DSE and carry out due diligence for considering a proposal to merge the operations of DSE with the former, said a joint statement.
According to the proposal, BSE would buy 100 per cent equity of DSE. A press statement released said today, "If boards vet the proposal, then both the exchanges would sign a memorandum of understanding for consolidation of operations subject to regulatory approvals."
If approved by the governing boards of the two exchanges, this will be the first takeover of a regional stock exchange in India by the BSE and possibly trigger off a consolidation process in the capital markets.
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Consequent to demutualisation of the BSE, the members of the DSE would be offered membership of Mumbai-based exchange at a concessional rate after surrendering their DSE membership, it added.
The value of concession would be arrived at after ascertaining the networth of DSE and apportioning it equally among the members of exchange, they said, adding there may be a discount to the normal membership price that dse would be charging for fresh trading membership. The BSE would put in place a permitted securities segment to commence trading in instruments of companies which listed on the DSE but not on the former.
Earlier, Sebi chairman D R Mehta had said he had no objection to the merger of regional bourses with the dominant ones. "In the wake of falling volumes, stock exchanges will have to formulate their own survival strategies," he had said in Delhi.
The DSE has a paid-up capital of about Rs 7.5 lakh, and its fund and reserves amount to over Rs 65 crore as on March 31, 2000.
The exchange has seen dipping volumes. The number of active trading members has also fallen sharply this year due to the falling markets.