The Bombay Stock Exchange (BSE) is close to concluding an alliance with at least three regional stock exchanges (RSEs), officials familiar with the matter have said.
Shares of companies listed on these three RSEs will be available for trading on BSE. Members of these three exchanges will be able to trade shares of companies listed on BSE, Asia’s oldest stock exchange, and issue their own contract notes.
According to officials, BSE has signed a memorandum of understanding (MoU) with the Madhya Pradesh Stock Exchange (MPSE). The agreement is awaiting the Securities and Exchange Board of India (Sebi) approval. The Vadodara Stock Exchange (VSE) is likely to sign the MoU with BSE this week. BSE has offered a similar arrangement to the Jaipur Stock Exchange (JSE), whose board will consider the matter next month.
BSE already has a tie-up with the Calcutta Stock Exchange (CSE), in which it has a five per cent stake.
BSE’s latest move comes after its bigger rival, the National Stock Exchange (NSE), joined hands with the Madras Stock Exchange (MSE) and signed MoUs with MPSE, VSE and JSE. NSE is also in talks with the Ahmedabad Stock Exchange (ASE) and CSE for an alliance. ASE’s board had approved the tie-up with NSE, subject to approval from shareholders, an official said.
Both BSE and NSE declined to comment. Both are actively scouting for alliances, in India and abroad, to expand their reach and win market share. To protect their turf from future competition, the two are wooing brokers by reducing charges and introducing new products.
As of June 30, there are 14 Sebi-recognised RSEs. Among these, ASE, CSE, MPSE and MSE have permanent recognition from Sebi. The recognition for JSE and VSE is valid up to January 8, 2011, and January 3, 2011, respectively.
Partnership with a national stock exchange is aimed at improving liquidity in stocks listed on RSEs, where there is hardly any trading activity at present. The alliance may also attract new members to RSEs.
