United Stock Exchange in talks with 3 banks to offload stake

The United Stock Exchange, which is gearing-up to start trading in currency futures by next month, is in talks with three private banks to offload up to 6 per cent stake, a top official said today.

"There are three more banks with whom we are talking to, but I am not in a position to name them. (We will) probably go for 5-6 per cent combined (further offloading). They are in various stages of approval from the regulatory body," United Stock Exchange (USE) director Saurav Arora told PTI.

Last month, the USE had sold a 1.33 per cent stake to the country's largest private sector lender ICICI Bank.

The exchange, backed by the Bombay Stock Exchange, is on track to start operations by September and a formal announcement will be made within this week, he said.

The exchange, which has received Sebi and RBI approvals to start operations, currently has 31 institutional shareholders, including all 21 public sector banks and five private lenders, including ICICI Bank, HDFC Bank, Axis Bank, Federal Bank and J&K Bank.

"We are in the pipeline to bring in a few more (shareholders)," Arora said, adding the USE has admitted over 400 members so far. He further said the exchange will start operations with currency futures and subsequently move to currency options.

While currency futures have been traded in the country since August 2008, Sebi had earlier this month given its nod for trading currency options starting with a pair of the rupee and the US dollar.
     
Asked about the potential of the futures market, Arora said, "the currency futures market is now averaging USD 4-5 billion. There is scope for three-four times that figure with the options coming in probably two years."
      
The USE will be the latest entrant in the currency trading market which is dominated by the National Stock Exchange and the MCX Stock Exchange.
    
Arora, who is a co-founder of the USE, said the exchange also wants the domestic futures market to be opened for foreign participation.
   
"I think at a policy level sometime a decision has to be taken. FIIs were also allowed into the stocks gradually. I think its a gradual step. In the last two years the (futures) market has grown even without foreign participation. As and when they come they will help the market to grow even further, Arora said.