Foreign bourses eye 5% CSE stake

Written by Markets Bureau | Kolkata, May 15 | Updated: May 17 2008, 04:41am hrs
Two foreign bourses are keen to become equity stakeholders of the Calcutta Stock Exchange (CSE) for taking part in the futures & options segment, which the reborn CSE considers its core, according to Udayan Bose, the international banker who is now the CSE chairman.

Our strength is in the F&O segmentMuch before Bombay discovered derivatives, Calcutta brokers were playing derivatives but it used to be called something else, said Bose.

Interestingly, two international stock exchanges have approached me to take a strategic stake of 5% in Calcutta Stock Exchange because they are wanting to get into the derivatives market, Bose said. But Bose declined to name the foreign bourses.

The 12-member board will discuss the issue on Friday. The board, elected last December following demutualisation, will also select a chief executive officer and company secretary and send the names to the Securities & Exchange Board of India (Sebi) for clearance. In the new structure, 52% of the equity of Rs 6.48 lakh is owned by non-brokers ranging from high-net-worth individuals to companies and institutions. The CSE, finally coming out of a coma brought about by a share scam in 2001, has also signed a deal with the Bombay Stock Exchange (BSE) that will give CSE brokers direct access to the BSE trading platform. Earlier, these brokers had to act as sub-brokers for trading on the BSE platform.

This will be a big leg-up for the 1000-odd CSE broker-members, who face measly trading volumes of a few crores on their home turf. Not only will their status be raised from sub-broker to broker for BSE trades, a CSE membership costs only Rs 12.5 lakh against Rs 1.25 crore for a BSE membership, giving the CSE broker the advantage of much lower costs. But, to prevent a rush of new members, the CSE has decided not to take in any new members for now. As Sanjay Budhia, managing director of Patton and one of the new stakeholders, explained, the direct access to the BSE platform will give the CSE member-brokers a much-needed morale boost.

Bose said there are two systems now ----a small number of companies are listed on the CSE online trading system called the C-STAR, and a larger pool of companies not listed here but on the BSE. The CSE gets listing fee income from the C-STAR members and a volume-based fee from the second group under the deal with the BSE.