BSE eyes stake in small bourses

The Bombay Stock Exchange (BSE) is looking at picking up stakes in regional exchanges, which have to demutualise by August-September 2007.

The Sebi had issued regulations for the demutualisation of 19 stock exchanges in November 2006. Demutualisation involves bringing down the brokers' stake in exchanges to a minimum of 49 per cent from the existing 100 per cent.

Rajnikant Patel, managing director and CEO, said the BSE's investment decision would depend on the business plan of regional bourses.

"Since it will be a strategic investment, we will have to examine the business plan and the returns on investment before taking any decision," he added.

The ailing Calcutta Stock Exchange (CSE), one of the oldest bourses in Asia, is taking steps at demutualisation by selling 51 per cent stake to strategic investors. BSE had sent representatives to study the business plan of the bourse last month.

The other interested parties were Allahabad Bank, United Bank of India, West Bengal Industrial Development Corporation and West Bengal Infrastructure Finance Corporation.

Patel, who was in the city to address a seminar on at the Indian Institute of Management (Calcutta), said the BSE was preparing a business plan to attain higher growth.

The introduction of more products will encourage trading and stop the export of capital to other countries, he said. The move to allow trading of securitised debt instruments or certificates on exchanges would boost the country's debt market. "Globally, there is a huge market for corporate bonds. The volume can be developed in India too," Patel emphasised.

The BSE, which has cash reserves worth Rs 1,000 crore, would consider going public if there was a need for more funds, Patel added.

Patel said the derivatives segment accounts for 3 per cent of the overall volumes on the bourse.