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Broker role curbed in new BSE corp plan curbed

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Janaki KrishnanAnindita Dey Mumbai
The Bombay Stock Exchange (BSE) drafted a fresh proposal for demutualisation, which includes reducing the representation of brokers on the board from 33 per cent to 25 per cent. Further, the brokers' stake in the corporatised entity is sought to be diluted.
 
The exchange was to discuss the proposal at an extraordinary general meeting on Friday but it was adjourned due to lack of quorum.
 
The exchange can submit a formal proposal to the markets regulator, the Securities and Exchange Board of India, only after it gets the proposal ratified by the general body.
 
Incidentally, the issue of dilution of brokers' stake was discussed at the recent High Level Capital Markets Committee meeting and it was loosely decided that a significant stake would be offered to large public sector banks and institutions.
 
There has been a plan for the exchanges to go in for a public issue after a period of one year.
 
But now sources said that there has been a rethink on this and banks will be brought in as strategic investors.
 
Sources familiar with the deliberations said that the idea is for government control over the exchanges. Sebi is understood to be in favour of this idea as this would effectively take the control of the exchanges out of the hands of brokers, who could still play an influential part. Sources said, "There could be an IPO further down the line, but the dilution would only be to a small extent."
 
Apart from the BSE, other exchanges were seen to be too small to go public and it was felt that it would be better for a large bank or institution to hold a stake in them.
 
Sebi has set March 31, 2005 as the deadline for bourses to coporatise and eventually demutualisation has been in the making for a long time now but it has become imperative since the ordinance on the Securities Contract Regulation Act was issued earlier this year.
 
The government wants brokers to have as little say as possible in the running of the exchanges and the entire functioning to be totally professional, on the lines of the National Stock Exchange.

 
 

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First Published: Dec 18 2004 | 12:00 AM IST

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