Stock exchanges seeking to list their own shares in a demutualised environment are unlikely to be allowed to do so without first making a public offer of shares. The Bombay Stock Exchange (BSE) proposal of listing its shares sans an initial public offering (IPO) may, therefore, not pass muster with markets regulator Securities & Exchange Board of India (Sebi).
While there is no official comment from Sebi on the matter, sources told FE that the regulator is unlikely to allow bourses seeking to list their own shares to do so without an IPO. The issue of listing stock exchanges has come to the forefront now with BSE making a formal proposal to the regulator.
Sources said while the BSE has made a request to list without a share sale to the public, the regulator might not be inclined to make an exception, as it does not want to be seen as setting a precedent. No BSE spokesperson was available for comment, but a highly placed source told FE: ?It is not proper to begin with an exception to the rule. This will set a bad precedent.?
It may be recalled that barring the first round of disinvestment of public sector undertakings (PSUs) in the early nineties, when financial institutions were given shares and the companies were then listed, subsequent rounds of PSU disinvestment were undertaken by way of offers for sale to the public.
In the specific case of BSE, too, opinion does not seem to favour giving the stock exchange special treatment. This is because of recent controversies surrounding the exchange, where serious board-level differences came into the open following the resignation of the exchange chairman Shekhar Datta and the trading of charges between a section of the brokers and the management. ?The exchange should set its house in order and work hard to compete with NSE. That will improve valuations,? the source said.
BSE, which completed its corporatisation and demutualisation process in May 2007, now has strategic and non-trading investors on the board, who together control 51%, with the rest held by brokers or trading members.
Deutsche B?rse and Singapore Exchange also picked up 5% each in BSE as part of the demutualisation process at Rs 5,200 a share. Brokers at the exchange are keen on a listing since that would give their shares currency.