BSE may buy stake in Calcutta Stock Exchange

The Bombay Stock Exchange is considering picking up a stake in the Calcutta Stock Exchange, the country's oldest bourse, when it is put on the block for divesting 51 per cent of its stake to reduce brokers' rights.

"We are working on how to make the business volume of BSE grow. We may consider taking a stake in CSE if we find business prospects," said Rajnikant Patel, BSE executive director and CEO.

He, however, said that a final decision has not been taken. "We will take a final decision after analysing if it makes business sense."

Consolidation of regional stock exchanges was widely expected and even the Securities and Exchange Board of India (Sebi) chairman M Damodaran had earlier indicated that mergers and consolidation of stock exchanges were expected.

The Federation of India Stock Exchanges was trying out a proposal of consolidation of regional stock exchanges and formation of Indonext.

Divestment of stock exchanges would be done mandatorily to comply with the guidelines issued by the capital market watchdog Sebi.

Sebi wants to delink the member brokers' right of trading and right of ownership of stock exchanges.

This reform had been introduced taking a cue from the success story of the National Stock Exchange and will help curb manipulations in the market.

Sebi appointed CSE administrator T K Das had said that the process of divesting the 51 per cent stake would start after a memorandum was passed by members at an AGM before November end this year.

"We are presently working towards passing the memorandum that will clear the new structure of the bourse and after that we will take up the issue of divesting stake," Das said.

Demutualisation of CSE has been cleared by the members in July at an extraordinary general meeting.

In the past, the local bourse had been planning to offer the 51 per cent stake to banks. The names of banks floating around were the State Bank of India, Allahabad Bank, UCO Bank and United Bank of India.

According to estimates, the face value of 51 per cent stake was at Rs 40 crore.