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BSE moots package for ailing regional exchanges

The Bombay Stock Exchange has announced proposals for the benefit of smaller exchanges on the verge of closure, following steady decline in their volume after the nationwide expansion of leading bourses.

The BSE has prepared a draft proposal suggesting them to sign an MoU with the BSE or join the BSE by floating a subsidiary or an entity of the exchange and acquire membership of the BSE and get its privileges.

The draft proposal prepared by the BSE would be submitted to the Securities and Exchange Board of India at a meeting organised on the issue, BSE vice-president Dina Mehta said today.

Mehta said that five exchanges including the Inter-Connected Stock Exchange of India, Baroda, Coimbatore, Cochin and Bangalore Stock Exchanges have already approached the BSE for membership, for the sake of their survival and their applications are currently under consideration.

While presenting its survival plan, the BSE has asked the regulatory board for relaxation in some of its regulations for the members of those exchanges willing to become BSE members. Relaxations were sought mainly in the case of margins paid by them, the use of infrastructure facilities of these exchanges by the BSE while admitting them as BSE members.

''We have 14 BSE cards lying with us, and in the case of SEBI accepting our suggestions, we may offer it to these exchanges to avail membership of the BSE,'' Mehta said.

SEBI, in the meeting of stock exchanges held in Bombay at the end of August, discussed the issue of the smaller exchanges and asked the exchanges concerned to submit their survival proposals for consideration. A few exchanges have already responded and asked some relaxations in SEBI's regulations.

According to the BSE's proposals, these exchanges can sign MoU with the BSE and take consequential steps such as trading arrangement on a member-to-member basis, on mutually decided business terms and conditions. The exposure of regional stock exchange members through the BSE members should not be included in RSE's local exposure and double margining at RSE for trades on the BSE should not be allowed.

The exchanges should make suitable representation to SEBI to amend this requirement. Further, a concept of 'associate member' be introduced with a member of the BSE.

The BSE has put forward another option that the exchanges can float a subsidiary or an entity formed by members of the exchange and acquire membership of the BSE and get the benefits and privileges of the BSE membership. While admitting these exchanges as a members, the BSE would like to use the infrastrucutre facilities for the purpose of trading to save the cost of transactions.

UNI

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