BSE invites Deutsche Boerse, SGX to join board

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Mumbai, Aug 9: Bombay Stock Exchange (BSE), the country’s second largest stock exchange, is set for momentous change. BSE has invited its two strategic investors —Deutsche Boerse (DB) and Singapore Exchange (SGX)—to join its board of directors, paving the way for a major change in its composition. Thus far, there was no foreign investor on the board of the stock exchange.

Confirming the move to invite the two foreign exchanges—both of whom hold 5% each in the exchange—a top BSE source told FE: “We have invited them to join our board. We are in discussions with them and they have responded positively.”

The two exchanges can join the board without the BSE having to expand it since there are already two vacancies following the resignations of former exchange chairman Shekhar Datta and Jamshyd Godrej, who resigned in June. On Thursday, BSE’s managing director and chief executive officer Rajnikant Patel also resigned, in what is being seen as the culmination of internal problems at the 133-year-old bourse. Chief operating officer Mahesh L Soneji is now looking after the day-to-day affairs of the exchange until Patel’s replacement is appointed.

There have sections of the exchange which have been pushing for DB and SGX to join the BSE board as that could add value to the exchange, which is battling to increase market share and fight competition from rival National Stock Exchange (NSE). After the exchange turned into a demutualised and corporatised entity, DB and SGX picked up 5% each at Rs 5,200 per share.

Sources in Securities & Exchange Board of India (Sebi) have also made it clear they have no problems if foreign investors join the BSE board. The NSE board already has a representative of NYSE Euronext on its board. NYSE holds a 5% stake in the exchange.

BSE has also decided to drop the plan to pick a 26% stake in commodity bourse National Multi-Commodity Exchange (NMCE), since it does not feel it will have enough leeway in driving the commodity bourse. However, BSE will continue to look for opportunities in the commodities space.