The Securities and Exchange Board of India (Sebi) has asked the 134-year-old Bombay Stock Exchange (BSE) to set its house in order before planning a listing.
BSE had been planning to list on the exchange for a while and had approached Sebi for permission to list without an initial public offer. Sebi also has to formalise norms for regulating self-listed companies. Some BSE members were keen on the listing of the exchange so that they could sell their shares.
Sources close to the discussions said that the market regulator has communicated its position to the stock exchange informally and BSE has already initiated steps to improve its technology platform, a key element of the makeover plan that Sebi found wanting.
To this end, BSE had acquired Marketplace Technology (MT), set up by Ashish Chauhan, to offer back-office solutions for brokers. The deal was estimated at Rs 43 crore.
Chauhan, who joined BSE, as Deputy CEO last week, was part of the original team that set up the National Stock Exchange (NSE). Before joining BSE, he was the CEO of Mumbai Indians, the team that plays in the Indian Premier League cricket tournament.
Over the years, BSE had constantly lost out to NSE on the technology front and new players such as Financial Technologies are trying to ride the technology path while setting up exchanges such as Multi-Commodity Exchange (MCX) and MCX Stock Exchange. The sources said this was the first big move by BSE in dealing with the handicap.
Although BSE has more companies listed on it, the exchange has lost the top slot in terms of turnover (see table). BSE will also be re-launching its derivatives trading and a new marketing campaign is expected to help it popularise the product.
The move comes at a time when others such as MCX-SX are trying to enter the space.
On its part, BSE has appointed James E Shapiro as the head of market development recently and has also acquired 15 per cent in United Stock Exchange of India (USE), one of the upcoming exchanges.