Chance For Bourses To Consolidate Hold

The exchange president M G Damani has already optimistically announced that the exchange would, following this, seek to go international with its broking network. Market pundits say that with the principle clearance granted for all SEs to expand, one would see the process of consolidation coming about.

The efficient exchanges would grow while smaller/regional exchanges would simply stagnate or fade away.

According to M R Mayya, who has witnessed the growth of the BSE, being a former executive director and closely linked with the inter-connectivity plan of the Federation of Indian Stock Exchanges (FISE), the regional stock exchanges will only stand to gain. "We would witness growth for the larger exchanges keen to expand and for the regional exchange the benefit would be greater arbitrage opportunity in key stocks, an activity which was initially available through the NSE alone," he said.

 

Mayya felt that with the BSE also raising its listing threshold, the local companies and the local investors at the smaller exchange would now find a greater focus through increased activity.

The BSE will, however, need to be prudent in its bid to race ahead of its arch trading rival, NSE.

A section of the markets is of the view that while agreements with some exchanges like Ahmedabad, Madras and Coimbatore have been worked out, the success would depend on how pragmatic the BSE is while implementing its expansion.

It is perceived that the BOLT expansion plan could run parellel to the inter-connectivity network being envisaged by smaller exchanges which are part of the FISE. According to FISE, the main argument in favour of the integrated market system is `unification', with all stocks being traded across the regional SEs. In the case of the BOLT expansion, the crucial issue is that the BSE broker conditions must be considered good for the majority of brokers at the smaller/regional exchange for the exchange to agree for an MoU with BSE.

With the BSE set to expand and the Delhi SE also considering a similar expansion, the competitive forces of the system would decide which markets need to expand further and which will fade away.

In the US, while earlier there were 15 exchanges, now there are six which register a strong influence on the markets. The amalgamation process would be witnessed in the Indian markets systems also.