Dse Board Fails To Okay Merger With Bse

The acquisition of Delhi Stock Exchange (DSE) by Bombay Stock Exchange (BSE) seems jinxed with the DSE board, which met today for the second time to discuss the issue, failing to approve the proposal. Incidentally, BSE had approved the acquisition on September 13 itself.

According to an elected DSE board member, the all-important board meeting remained largely unattended with six of the eight public representatives on the board excusing themselves from the meeting. Serious differences over the valuation of the Delhi bourse cropped up in the meeting, he said.

The board also put off its decision on setting up a 100 per cent subsidiary to seek trading membership in BSE. Sources said the since the bourse's hardware and software would not be of much value to BSE, the valuation could be affected given that the network infrastructure of the bourse too was outdated.

BSE had proposed that members of the Delhi bourse should become trading members of the Bombay bourse within three months. "However, since only about 100 members of DSE are active, the balance 200 members could resort to panic selling of the cards. We have, therefore, proposed to increase the time-frame to 2-3 years," a board member said.

The acquisition proposal would now be taken up for further discussion on October 12, sources said. The proposal to float a separate subsidiary would also be taken up next Friday, they added.

Sources said that floating a DSE subsidiary was only an interim measure and was subject to the demutualisation of BSE. "In case BSE is demutualised within the next 2-3 months, we will not float a separate subsidiary. It is only a fall-back option in case BSE demutualisation is delayed. Our members should not be deprived of a trading platform in the intervening period," officials said.

The merger proposal, if approved by DSE, would be the first takeover of a regional stock exchange in India by BSE and could possibly trigger off a consolidation process in the capital markets.