BSE picks up 15% stake in USE

Bombay Stock Exchange (BSE) will buy 15 per cent in India’s newest bourse — United Stock Exchange of India (USE). BSE did not provide financial details, but a statement said USE would now operate as its group company.

USE has been formed with equity partnership from state-run and private companies and banks for trading in financial derivatives. The National Stock Exchange (NSE) is a dominant player in the equity derivatives market, generating over 95 per cent of the volumes. In currency futures, both NSE and the MCX Stock Exchange are running neck-and-neck.

BSE said after its annual general meeting today that the stake buy would help the two exchanges in developing currency and interest rate derivatives markets.

Interest rate derivatives are yet to be launched and the currency futures business is at a nascent stage.

Sources said BSE would provide technology and manage operations for currency, interest rate and equity futures trading, and USE will be involved in marketing.

The stake buy will also give BSE an edge over other stock exchanges, as USE’s large network of banks can be extensively used for increasing market participation.

USE has 12 promoter banks such as Allahabad Bank, Andhra Bank, Bank of Baroda, Bank of India, Federal Bank and HDFC Bank. Corporate promoters include MMTC, Indian Potash, Jaypee Capital and TCS.

Banks hold around 49 per cent of USE’s equity and private companies account for the remaining 51 per cent. USE has a paid-up capital of close to Rs 150 crore.

BSE chairman Jagdish Capoor said,”We are happy to be joining hands with the largest banks, end-users and trading entities to drive the development of this market.”