Bse Card Goes Abegging Despite Price Drop
Even at this price, there are 8 to 10 sellers but no buyers in depressed market conditions.
This means that the card value has dipped by nearly 40-45 per cent in the span of one year.
The price through auction has been relatively stable at just above Rs 2 crore because it is seen as a clean card by marketmen.
Prevailing market conditions could depress the card value further, with factors like the higher working capital expenditure and shrinking brokerage charges affecting small- to medium-size individual brokerage firms. In a depressed market, with the tightening of margins at major stock exchanges, the broking community is evaluating the clientele exposures.
In these conditions, the BSE card would not find buyers, even at lower levels,'' a BSE broker said, seeking anonymity.
The growth of the National Stock Exchange (NSE) over the past year has also resulted in the shine coming-off the card marginally.
According to information available, sellers have been found over the past two weeks, but no fresh deal has been struck even at these levels.
The scenario is different for the foreign institutional investors (FIIs), who have preferred to buy the BSE card at prices higher than the prevailing market levels.
FIIs have, however, shown their preference to buy the card through auction, where there are no liabilities and the problems relating to bad deliveries and settlement of the defaulting/suspended broker's books of accounts have already been sorted out.
FIIs like Crosby Securities and Credit Lyonnais have bought cards through the auction process. Crosby Securities picked it up at nearly Rs 3.7 crore, while Credit Lyonnais at just above the Rs 2.5-crore mark.
According to an exchange authority, the cards picked up by the FIIs were at a higher level as the pricing included the valuation for the office space, furniture and back-office equipment.
The working capital costs range between Rs 25-30 lakh alongside Rs 4-5 lakh for three terminals and modem at the office... to cover the interest of 18 per cent, the broker would have to do business of nearly Rs 15,000 per month in depressed market conditions,