The world may be reeling under the shockwaves of meltdown. The bourses may be trying hard to avoid the bear hug. But the Bombay Stock Exchange?s (BSE) has decided to take up aggressive initiatives to tackle the malaise. The BSE board on Saturday met its two overseas strategic investors?Singapore Exchange (SGX) and Deutsche Borse (DB)?at Jeejebhoy Towers in Mumbai.
According to sources, the board discussed increasing the stake of the strategic partners from the current 5% levels to 15% levels as allowed by the market regulator Securities & Exchange Board of India (Sebi).
It is learnt that the BSE is keen that both the bourses increase their stake and take a keener interest in offering attractive products in the market, especially in the F&O segment. Turnover in the segment has fallen to a few lakh in the past month and several brokers have voluntarily closed their derivatives accounts. The volumes in the cash segment too have shrunk and are now causing a threat to the exchange?s profitabilty. However, the exchange has a huge investible surplus with more than Rs 2,000 crore in investments, and hence is not financially perturbed at the moment.
A senior board official told FE, ?We have discussed about the increase in the stake, but final call will be only taken by Sebi in this matter.? Sources in the know say the next stake sale will happen at lower valuations and might require the exchange to concur with Sebi before this happens. When asked about their view on raising their stake in BSE, a SGX spokesperson said, ?We pursue initiatives that position SGX as an Asian Gateway and that will offer clear benefits for the parties involved and enhance shareholder value.? DB representatives were not available for comment.
However, the presence of DB representatives in the board meeting, without them being board members, also indicates towards serious stake upping talks, reckons the source. ?The fact that DB is not on the board but was present for the meeting, speaks volumes about BSE?s intentions,? he added. SGX has Wai Kwong Seck, its CFO on the BSE board.
Another key issue, appointment of the new CEO and was also discussed in the meeting. To appoint the CEO of the Asia?s oldest exchange, BSE has few days ago appointed a committee, which will shortlist candidates for the CEO post.
In October 2008, the Securities & Exchange Board of India (Sebi) had increased the ceiling from 5% to 15% for strategic long-term investors in stock exchanges. The two exchanges were the only strategic participants who had evinced an interest in hiking their stake in the exchange when the limit was increased. Apart from the stake sale, the board also discussed several initiatives that are likely to be unveiled in a few days. Appointing a CEO is also seen as a top priority for BSE. A senior official told FE, ?We are likely to appoint the CEO after the committee gives the names of the candidates. We have several candidates and soon some final conclusion will be taken in this matter.? BSE?s managing director and chief executive officer Rajnikant Patel had resigned on August seven last year and chief operating officer Mahesh L Soneji was appointed to look after the day-to-day affairs of the exchange until Patel?s replacement is appointed.
The BSE board has, apart from chairman Jagdish Capoor, Jitesh Khosla, joint secretary, ministry of corporate affairs, and retired bureaucrat SN Menon as public interest directors. Ishaat Hussain of Tata Sons, Vivek Kulkarni, chairman and CEO, Brickwork India and Sudipto Sarkar, senior advocate, Kolkata High Court and Wai Kwong Seck, senior executive VP and CFO, Singapore Exchange Ltd are on the board as shareholder directors.
Prakash R Kacholia of Emkay Global Financial Services, Balkishan Mohta and Siddharth J Shah of JGA Shah Share Brokers are on the board as trading member directors.
