Sebi Insists On Bse Broker Contracts For Bolt Spread

The Securities and Exchange Board of India has insisted that the contract for the expansion of the BSE On Line Trading system (BOLT) should be signed by the member of the Bombay Stock Exchange. The point was made in a meeting held yesterday between Sebi, BSE and Pune Stock Exchange officials.

This implies that even if the trade is executed in Pune, the contract will have to be issued by the BSE broker in Mumbai who has a pact with a PSE broker. The move has an implication on all centres where stock exchanges are present and BSE intends to expands. BSE has also signed a MoU for expansion of BOLT with Ahmedabad and Calcutta Stock Exchanges besides PSE. A section of BSE members earlier said that this makes PSE brokers their sub-brokers and were not interested in taking the responsibility of the position built by their partner in other centres. However, Sebi has expressed concern about the interest of the investor in Pune who would deal through BOLT. Sebi officials said PSE is expected to express its view on the amendments suggested by Sebi officials and the issue of contracts for trades in the next meeting.

Sebi has also insisted that amendments in bye-laws of respective stock exchanges are a must for commencing trading through the BOLT network. Beyond the MoU there has to be specific bye-laws for trading to commence through the BOLT network at other regional exchanges. We are insisting that an agreement is a necessity, a Sebi official said.

This is the first time that a regional bourse has approached the capital market watchdog for the clearance of trading through the BOLT network. The agreement could be used as the role model for other exchanges seeking the BOLT network.

While BSE agrees that the interest of the investor has to be protected, they are still in the process of working out modalities for the agreement that would be signed with PSE. There is no incompatibility on the amendments that BSE or PSE have to make for BOLT expansion. We are working out on nitty gritty involved for the agreement that has to be signed. A final view can be taken only when PSE responds to suggestions put forward by Sebi, a BSE source said.

When asked if BSE would use the same model for other stock exchanges, the source said that BSE would have to heavily depend on this model. We may have to heavily depend on this model. However, all agreements will be worked out with respective exchages separately, the source added.