The Hindu Business Line : BSE board meet today

Mumbai, July 11 The Bombay Stock Exchange (BSE) board is meeting on Saturday; however the agenda for the meeting remains under wraps. The meeting assumes significance in the light of recent events at the Exchange, chiefly the resignation of some of its board members.

There is also increasing concern within the organisation over the slow pace of progress at the exchange (especially in view of the rapid strides made by the rival NSE) although it was demutualisation happened in May last year.

BSE spokesperson declined to comment on the agenda for the board meeting.

Ever since BSE was corporatised and foreign investors Deutsche Bourse and Singapore Stock Exchange picked up 5 per cent stake apiece in the exchange for Rs 189 crore each, the market expected changes in the organisation in the form of new products and technologies which would help it compete with NSE.

However, little of that has happened. The exchange has been rapidly losing out to NSE in terms of both cash and futures trade in equities.

In the futures segment, the product basket has seen hardly any addition. In the futures market, the Sensex mini future and options contract in much smaller market lot of 5 was introduced, but has not been getting much response.

“Trading in the F&O market on NSE is more user friendly. Trading happens mostly in the Nifty stocks,”said an official with a broking firm dealing with institutional clients.

The BSE’s daily turnover in the Futures & Options segment is less than Rs 100 crore as compared to NSE’s daily turnover of between Rs 40,000 crore and Rs 50,000 crore.

Even in the cash segment of the equity market BSE’s daily turnover lags far behind NSE. The only F&O product that has succeeded on the BSE platform is Sensex Futures as compared to the large number of index and stock specific products actively traded on NSE.

Mr Shekhar Datta, who was Chairman of BSE, and Mr Jamshyd Godrej, who was Director, resigned from the board last month, citing personal reasons. However sources indicated they were probably unhappy over the functioning of the organisation.

BSE also denied speculations appearing in the media over their resignations. Later on June 25 the Board of Directors of BSE met and elected Mr Jagdish Capoor as Chairman.

Around the same time, on June 20, over 200 BSE trading members, including many prominent brokers, were penalised for speculative trading in KGN Industries and Sylph Technologies, which sources say also led to some conflict among the BSE members.

KGN and Sylph, both relisting after a gap of six years, zoomed to ridiculous highs in speculative trade, forcing BSE to halt trading in the case of KGN, mid-way during the trading hours.

Singapore Stock Exchange and Deutsche Bourse may not have taken lightly the functioning of BSE.

Meanwhile there are talks that there is disagreement within the exchange on certain investments made by the exchange itself in the recent past.

BSE has invested Rs 40 crore in the National Multi Commodity Exchange for a 26 per cent stake; it has also taken five per cent stake in Calcutta Stock Exchange for Rs 5 crore.

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