Stocks
BSE to enter capital markets by March next year

Finally, the oldest stock exchange from Asia, is going to list its own shares, which may allow its stakeholders a good exit price

BSE Ltd, formerly known as Bombay Stock Exchange, has decided to list its shares by March 2013. This was announced at the annual general meeting (AGM) of the exchange held on Friday. Only thing, BSE would have to list its shares on rival bourses like the National Stock Exchange (NSE), or MCX-SX.

 

BSE’s shareholders, who are mainly brokers, so far have been watching the erosion silently in the hope that someone at the top like Madhu Kannan, the hotshot imported from New York, would manage to list the exchange at a good valuation and give them a good exit price. Mr Kannan’s expensive management team, comprising a number of US citizens (some of Indian origin), were expected to attract foreign institutional investors (FIIs) to invest. However, SEBI’s new rule of pre-empting 25% of the profit every year may turn out to be a big dampener and worried shareholders and staff are beginning to ask questions. Incidentally, after SEBI announced the new policy framework for bourses, the next day, Mr Kannan announced his plans to quit BSE to join the Tata Group.

 

Earlier in April, market regulator Securities and Exchange Board of India (SEBI), while accepting some recommendations of the Bimal Jalan Committee, has said that 51% stake of bourses could be held by the public. “The stock exchanges will have diversified ownership and no single investor will be allowed to hold more than 5%, except the stock exchange, depository, insurance company, banking company or public financial institution, which may hold up to 15% while 51% of the holding of the stock exchanges will be held by the public,” it said.

 

The stock exchanges may be permitted to list when they put in place the appropriate mechanisms for tackling conflicts of interest, SEBI said, adding, the stock exchanges will not be allowed to list on itself. No stock exchange shall be permitted to list within three years from the date of approval by SEBI, it said.

 

Notifying new rules for ownership and governance of exchanges in June, the market regulator pegged the net worth of stock exchanges at Rs100 crore. It said direct and indirect exposure to any stock exchange will be considered while calculating the prescribed shareholding limit.

 

The new rules allows bourses to list on any recognised stock exchange other than itself and its associated stock exchanges, within three years of commencing operations, subject to certain criteria.

 

With its shares skyrocketing 26% on debut trade, country’s largest commodity bourse Multi-Commodity Exchange (MCX) remains the most successful initial public offering (IPO) so far in 2012 amid turbulent market conditions. MCX is the only exchange listed in India, till date. Listed on 9th March, shares of MCX opened at Rs1,387 on the BSE—a premium of 34% compared to its issue price of Rs1,032. Even though, the scrip lost its initial momentum, it managed to close with about 26% gain at Rs1,297.05. On the first day, it even touched the high of Rs1,420.

 

BSE is a corporatized and demutualised entity, with a broad shareholder base which includes two leading global exchanges, Deutsche Bourse and Singapore Exchange as strategic partners.

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