Financial Daily from THE HINDU group of publications
Saturday, Jan 11, 2003
Financial Daily from THE HINDU group of publications Saturday, Jan 11, 2003 |
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Markets
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Stock Exchanges BgSE to go slow on external evaluator Our Bureau
BANGALORE, Jan. 10 THE Bangalore Stock Exchange (BgSE) has decided to "go slow" on appointing an external evaluator to advise on its valuations as it seeks clarity on tax benefits, sources said. Earlier, the bourse had approached leading investment bankers to value the company following market watchdog, Securities and Exchange Board of India (SEBI's), directive on corporatisation and demutualisation of stock exchanges. Following demutualisation, the stock exchange was likely to be clubbed with its subsidiary, BgSE Financials Ltd, through a reverse merger. Earlier, SEBI had sought "certain clarifications on legal issues" on the proposed reverse merger of the subsidiary. On November 29, SEBI laid a roadmap to convert all exchanges into companies limited by shares and changing their character to profit-motivated entity from the current non-profit structure. The Income Tax Act will have to be amended if necessary so that the past profits of a stock exchange which were not taxed when it had the character of a non-profit entity, should not be taxed when the character of the entity changes. The reserves could be taxed in the hands of the shareholders, at the net applicable tax rates, when these are distributed as dividends. All future profits of the exchanges would be taxed. Shrinking volumes following the ban on short selling coupled with T+3 payment regime have forced most of the brokers registered with the BgSE to migrate to its subsidiary institutional broking house, BgSE Financials. Trading has come almost to a standstill from an average of daily volume of Rs 50-Rs 70 crore a year ago. Most of the brokers registered with the regional exchange now trade through BgSE Financial, that is a registered member of the National Stock Exchange. Meanwhile, the bourse has started to act as a clearing member of the NSE for derivative trading and subsequently handles clearing operations for external agents nationally.
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