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Raja Simhan T.E.
Sanjiv Shankaran

CHENNAI, July 8

AT a meeting held in Kochi last week, the Bombay Stock Exchange (BSE) and a handful of regional stock exchanges explored the possibility of a merger over the next few years.

The original agenda of the Kochi meeting was to work out details of a partnership between BSE and regional exchanges on sharing a trading platform in the immediate future.

During the course of the meeting, representatives of the regional exchanges and BSE discussed the possibility of a merger once all the exchanges move to a corporate organisational structure, said Mr P.J. Mathew, Executive Director, Madras Stock Exchange.

At present, the stock exchanges are required to submit a proposal to SEBI by the end of the month to transform themselves into corporate entities (de-mutualisation process). The proposals would require to be approved by SEBI, and the exchanges have been given three years since submission to transform themselves.

Following the transformation, Mr Mathew said there could be a merger of "like-minded regional exchanges with BSE".

In the near future, BSE and a handful of regional exchanges are working on banding together to use a common trading platform to trade in companies that have a paid-up capital of up to Rs 20 crore.

The infrastructure for the trading platform would be provided by BSE, and would be dubbed the "S" group. The clearing and settlement mechanism for trades on "S" group would also be provided by BSE.

According to Mr Mathew, stock brokers of regional exchanges that are part of the "S" group would be allowed to issue contract notes for trades they execute.

Queried on the arbitration proceedings in the event of a dispute, Mr Mathew indicated the details had not been worked out. "Conceptually, everybody agreed to form a separate segment," he said.

The next milestone would be a more comprehensive meeting of the Federation of Indian Stock Exchanges (FISE) in Mumbai in the last week of July. The final proposal that is to be submitted to SEBI would be decided at the meeting, said Mr Mathew.

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