The Bombay Stock Exchange (BSE) has begun discussions with the Securities & Exchange Board of India (Sebi) on a proposed initial public offer (IPO) and listing. The country?s second largest exchange is understood to have begun the groundwork, and is in talks for the detailed norms on these issues.

Sources said the discussions with Sebi were focusing on whether an IPO is the required way or there could be a listing of the exchange?s shares without an IPO. The crucial issue of self-listing (listing of an exchange?s shares in its own platform) is also part of the gamut of issues being discussed by the exchange and the regulator, sources said. BSE officials were unavailable for comment.

A public share sale ? or initial public offer (IPO)?of the exchange is seen as an important means of making the exchange, Asia?s oldest, more accountable to the public. BSE turned into a full-fledged corporatised entity in May last year, when it completed the process of offloading 51% stake to non-trading members, while trading members retained the rest. This was mandated by the BSE (Corporatisation & Demutualisation) Scheme, 2005.

?Listing with or without an IPO requires a policy framework from Sebi, which is what the exchange is following up on with the regulator,? sources said. ?The discussions will focus on self-listing and a mechanism to monitor that.?

BSE is understood to be examining the proposed IPO of the Multi-Commodity Exchange (MCX) as a kind of benchmark for its own listing. The MCX IPO has received Sebi?s approval. BSE?s rival, National Stock Exchange (NSE), has a stake in MCX, hence its listing will be significant. Financial Technologies, the promoter of MCX, also has a stake in NSE. ?The MCX IPO is a positive indicator for BSE?s own plans,? sources said.

The proposed IPO & listing has gained significance as it is believed to be one of the contentious issues between a section of trading members and the management of the exchange, with some brokers alleging that the management may be dragging its feet on the matter.

Said Mohan Vijan, boss of the powerful BSE Brokers? Forum: ?Listing will make the exchange more transparent and accountable. It is a good thing and should happen.?

Last week, BSE?s non-executive chairman Shekhar Datta and shareholder director Jamshyd Godrej put in their papers.

The chairman?s exit was believed to be his way of protesting constant interference by a section of the board in the exchange?s running, something he felt should be done by the professional management of the bourse.

The issue of inducting nominees from the two strategic shareholders?Deutsche Boerse (DB) and Singapore Exchange (SGX)?on the BSE board is also seen as a key factor in the entire controversy, as Datta was believed to be in favour of inducting such nominees.

Vijan, however, said there was no opposition from brokers to inducting DB and SGX nominees and such a move would benefit BSE.

Significantly, NYSE Euronext, which has a 5% stake in NSE, has a nominee on the board of that exchange. While the BSE board has three broker nominees, the NSE board has none.

Meanwhile, Sebi is being updated regularly on the developments at BSE after the resignations, sources said.