Over 500 BSE brokers offer shares for sale

The Bombay Stock Exchange (BSE) is set for a smooth transition to a demutualised environment with more than 500 brokers from among 700-odd member brokers offering their shares partially and fully as the deadline for submission of shares ended today.

The response was overwhelming even though the members would have to pay a capital gains tax of 20 per cent on their stake sale.

The BSE had asked members to tender their shares to an escrow account at a base price of Rs 5,200 per share by March 9, which would allow the exchange to reduce the share of member brokers to 49 per cent through an offer for sale.

"More than 500 brokers have submitted their shares, some have submitted fully while others have partially. We have got the required number of shares (to bring down the brokers stake to 49 per cent),"said Mohan Vijan, chairman of the BSE Broker's Forum. The demutualisation rules required BSE to divest at least 51 per cent of brokers' stake by mid-May this year.

Vijan said around 100 members of the total 700-odd brokers were not able to participate in the offer on account of litigation issues. In some cases, it was due to payment defaults by the concerned brokers. "

Around 5-6 per cent of the total brokers' shares were blocked on account of transfer of their shares to the names of family members and these can only be encashed post the listing of the exchange,"said a member broker.

On the tax aspect, Atul Bheda,a tax consultant said: "Tax will differ from individual to individual considering the cost of acquisition and indexation."

BSE's members want a valuation of at least $1billion for the exchange,which is likely to fetch them more than Rs 6000 per share.

When Deutsche Boerse and Singapore Exchange bought five per cent stake each at Rs 5,200 per share, BSE had issued fresh shares to them. BSE is offering a base price of Rs 5,200 to brokers. Brokers were issued 10,000 shares each of Re 1 in BSE a couple of years back when the exchange was corporatised.

"The base price is Rs 5,200, below which we would not sell. But, we are expecting a much better price,"Vijan said.