Bse Depository Plans Delayed

The proposed depository to be set up by the Bank of India along with the Bombay Stock Exchange (BSE) has been delayed beyond its scheduled April launch. It is likely that the depository will be in place only after June next.

When queried on the delay, a BSE director said: "Instead of rushing to set up a depository and committing mistakes, we would prefer to wait and learn from others' mistakes before setting it up."

The bourse had earlier announced that its depository would be in place by the last quarter of 1996-97, and preferably by January 1997. The deadline was then extended to April.

BSE president M G Damani will be visiting Singapore and Australia on March 8 to source hardware for the depository.

He said Sydney in Australia has two of the best depositories anywhere. "Both depositories have the latest technology. While the hardware for Astra Clear (a Sydney-based depository) is made by IBM, Tandem provides the same for the other one," he said.

BSE officials have also been consulting Price Waterhouse to formulate a plan for the depository.

Bank of India holds a 50.5 per cent in the joint venture, while BSE has the remaining stake. Explaining the rationale behind BoI picking up a 50.5 per cent stake, a BSE official said: "According to banking guidelines, any bank, while picking up stake in a joint venture, can either take up to a 30 per cent or has to go for at least a 50 per cent stake."

While, in cases of a 30 per cent stake no specific regulations are involved, a stake of 50 per cent or higher would automatically ensure that the joint venture is a subsidiary of the parent bank, he added.

Bank of India, incidentally, is understood to be keen on retaining the depository as its subsidiary and any liquidation of stakeholding will be done only on the BSE front.

"We have received bids from various institutions and other exchanges are also welcome to apply", said a top BSE official. The exchange also plans to increase the capital requirement for its depository plan.