BSE looks to enter material world

Will apply for commodities platform after Sebi-FMC merger on Monday

The BSE exchange told member-brokers on Wednesday it would apply to the Securities and Exchange Board of India (Sebi), for a commodities trading platform, said sources. The application would be made after Sebi's merger on Monday with the Forward Markets Commission (FMC). FMC is the regulator of the commodity derivatives markets.

A proposal to start a commodities platform was approved by the BSE board of directors on October 20, 2014. The National Stock Exchange is already in the commodities space, through its stake in the National Commodity and Derivatives Exchange.

BSE repeated it was awaiting a nod from Sebi to list itself. On Friday, the exchange's annual general meeting (AGM) will take up a resolution to set up a committee to supervise the exchange's listing and offer for sale (OFS). The resolution will be taken up at the request of the shareholders. (The OFS route is used by promoters to sell their shares to the public. The cash raised goes straight to the promoters. No capital goes to fund the company's expansion projects or other needs. Apart from promoters, non-promoter entities holding more than 10 per cent of shareholding can also sell stake through an OFS.)

By the resolution, the committee shall consist of a minimum five members of the board, including one shareholder-director and at least three representatives of shareholders, including two of foreign direct investment/FPI investors. (FPI is foreign portfolio investment.) The committee will meet quarterly.

BSE did not respond to an e-mail. The exchange is also planning to start a project called Sammaan, to bring together non-governmental organisations and companies interested in corporate social responsibility.

Exchange members say the main hurdle to listing the exchange is the requirement that every single shareholder in the exchange be ‘fit and proper’. Also, Sebi’s new rules in 2012 include a cap on an exchange’s profits, requiring 25 per cent of these to get transferred to a separate fund for investor protection.

In December 2012, the BSE selected 14 investment banks, including JPMorgan, Barclays, Bank of America Merrill Lynch, and UBS, to manage its public issue.

Deutsche Boerse and Singapore Exchange own 4.91 per cent each in BSE. State Bank of India and Life Insurance Corporation own 4.83 per cent each. Other shareholders include Quantum, Caldwell India, GKFF Ventures, Acacia Banyan, and Atticus Mauritius, who hold 3.86 per cent stake each in the exchange.

At its annual general meeting last week, the National Stock Exchange is said to have told shareholders it had filed a proposal to Sebi to restructure its business, to comply with the listing norms for exchanges.

The capital market regulator is also expected to take a fresh look at the proposal to allow listing of stock exchanges after its merger with commodities market regulator Forward Market Commission (FMC).

The merger between the two regulators will be complete on September 28. Currently, the Multi Commodity Exchange (MCX) is the only listed commodity bourse. The exchange will come under Sebi jurisdiction following the Sebi-FMC merger.