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The Inter-connected Stock Exchange of India (ISE), an exchange promoted by a dozen regional exchanges, is looking to sell its broking arm, ISE Securities & Services Ltd.
The broking subsidiary, with operations across 21 states, had been set up to allow ISE members access to national exchanges as sub-brokers. The exchange has invited bids from interested parties till March 22, according to a recent advertisement.
P J Mathew, managing director of the exchange, stated the sale was to meet regulatory requirements. "Sebi (of Securities and Exchange Board of India, the capital markets regulator) has given us a nod to start operations, subject to sale of the subsidiary," he said.
Employees would remain with the subsidiary or be re-absorbed into the exchange following the deal, he said. He expects the sale to be concluded by May.
The subsidiary operates from at least 80 locations, with 456 registered sub-brokers and authorised persons on the National Stock Exchange (NSE) and 280 on the Bombay Stock Exchange (BSE), according to figures from its website and the latest annual report.
It recorded a total turnover of Rs 31,938 crore on the NSE and the BSE together during the financial year ending March 2012, and had a total income of Rs 10.3 crore. The profit after tax was Rs 1.6 crore for FY12.
The subsidiary was established in 2000, on the basis of Sebi's policy for revival of small stock exchanges. The policy allowed for these subsidiaries to take up membership of larger exchanges such as NSE and BSE.
In November 2011, ISE had announced plans to raise Rs 200 crore through private placement of shares to fund expansion plans. Mathew said an agency for this had been appointed and the process was underway. The fund raising is required to meet a Sebi-mandated net worth of Rs 100 crore for stock exchanges, to be achieved by 2015.
The Jaipur Stock Exchange, the Uttar Pradesh Stock Exchange, the Madras Stock Exchange and the Bangalore Stock Exchange are among the promoters of ISE.
