Regional bourses intensify consolidation effort

Last Updated: Fri, Dec 07, 2012 07:40 hrs

pAhead of the deadline set by the Securities and Exchange Board of India Sebi for closure of defunct stock exchanges some regional stock exchanges RSEs have intensified efforts to consolidate in a bid to stay afloatppThe Madras Stock Exchange MSE and Bangalore Stock Exchange BGSE are in advanced stages of discussion for a possible merger or consolidation according to top officials thereppIn April this year Sebi had said an exchange without any trading platform or with annual trading less than Rs 1000 crore should apply for voluntary derecognition and exit It had also given three years to the exchanges to meet a minimum net worth of Rs 100 crorepp&ldquoWe are in fairly advanced stages of discussion with the MSE for working together We have not yet defined the terms of agreement there would be a possible amalgamation or merger&rdquo said Manjit Singh executive director BGSEppEven after an amalgamation of the two it would be difficult for the new entity to meet the criterion of Rs 100 crore as net worth their combined value would be close to Rs 50 crorepp&ldquoWe are in talks with the BGSE for consolidation However the entire process is based on some positive assumptions We are hopeful of launching our own trading platform which in turn will attract traders&rdquo said V Balasubramoniam secretary MSE The latter had recently applied to Sebi on the latter issue To increase the trading volume the exchanges are also vying to acquire members According to rough estimates there are 5000-8000 trading members registered on the 17 RSEsppRecently Calcutta Stock Exchange CSE floated a proposal with Sebi to create a new category of traders who wish to migrate to other RSEs so that they can move to another exchange at a lower deposit amount Notably CSE in which the Bombay Stock Exchange BSE has a five per cent stake is the only regional exchange to be compliant with the new rule None of the other exchanges have their own trading platforms and hence have nil tradingppEarlier the Ahmedabad Stock Exchange had initiated a dialogue with two other West-based exchanges the Baroda Stock Exchange and the Saurashtra Kutch Stock Exchange for a possible merger of all threeppAhmedabad Stock Exchange is planning to sell some of its immovable assets to enhance its net worthppIn recent days almost all RSEs had adopted the subsidiary route under which the exchange floats a subsidiary or an entity formed by its own members which acquires the membership of a national exchange to stay afloat Exchanges have been forging ties with the National Stock Exchange and the BSE through subsidiaries Sebi had earlier said the members of a derecognised exchange could continue to avail of trading opportunities through an existing subsidiary company which would function as a normal broking entity of a national exchange With the new regulation the tie-up plans have become redundantp

More from Sify: