INDIA BUSINESS WORLD - OCTOBER 2006
THE MONTH THAT WAS...

NYSE STAKES CLAIM TO 26% HOLDING IN BSE

 THE New York Stock Exchange (NYSE) is in advanced negotiations to pick up a strategic equity stake in the Bombay Stock Exchange (BSE). Sources said a team from NYSE was recently in the city to talk with the BSE brass. The move, if successful, could lead to a sharp rise in listed Indian firms and an improved access to modern trading processes.

   BSE, Asia's oldest exchange, is diluting the equity stake of its member brokers as part of Sebi's demutualisation scheme, seeking to separate ownership from trading rights. The BSE aims to pare member brokers' equity stake from 100% to 49%, by selling 26% to a strategic partner. The exchange also plans to sell another 25% to the public through an initial public offering. The exchange has appointed Kotak Mahindra as the financial advisor for the strategic deal.

   A BSE spokesperson said: “These are all media speculation. We would not like to comment on this.” Mr Rajnikant Patel, CEO and MD, BSE declined to comment on the issue. Mr Patel had said the exchange is open to options like offering stake to stock exchanges, banks, FIs or foreign bilateral agencies.

   NYSE's bid to pick up 26% in BSE comes in the wake of a series of global developments in exchanges, including a rebuffed bid by Nasdaq to take over the venerable London Stock Exchange. The year also saw Sweden's OMX coming close to buying Iceland's stock exchange Icex for Swedish kroner 250 million.

   Despite repeated efforts, NYSE couldn't be reached for its comment. Equity participation in the 150-year old exchange had also evinced interest from technological bourse Nasdaq, which is also in the race to pick up the strategic stake in BSE. In 2000, BSE had held talks with NYSE and Nasdaq for terminals in each others' bourses, leading to speculation that an increased interaction could speed up efforts to modernise BSE. But sources said the tech-oriented Nasdaq could have problems of synergy with BSE.