BSE may have to guide CSE’s second innings

With traded turnover of only Rs 694 crore in 2006-07,
revival plan for the Kolkata bourse is not going to be an
easy task even for Asia’s oldest stock exchange

Sep 06, 2007
Ashish Rukhaiyar
MUMBAI

THE Bombay Stock Exchange (BSE) may soon find itself with the responsibility of running a second exchange. The exchange, which recently bought a 5% stake in the beleaguered Calcutta Stock Exchange (CSE), has been asked to chalk out a revival plan for the regional bourse, said sources. BSE had shelled out around Rs 6 crore for its 5% stake in CSE, valuing the regional player at Rs 123 crore.

The market talk is that a BSE official may be parachuted in to take over as chief executive officer. “We believe that a BSE, CSE combination presents a good business opportunity for both BSE’s & CSE’s members,” said an announcement on the BSE website.

Infusing a fresh lease of life into the moribund CSE is going to be an uphill task for Asia’s oldest bourse. Traded turnover for the whole of 2006-07 on CSE stood at Rs 694 crore. In contrast, average daily traded turnover on BSE is around Rs 4,500 crore. Also, BSE is struggling to boost turnover in its comatose futures & options segment, without much success so far.

According to industry sources, the CSE board will be reconstituted shortly, with the Securities and Exchange Board of India (Sebi) nominating new members. Currently, Tushar Kanti Das, a retired IAS officer, is CSE’s administrator, after the exchange’s board was superseded some time ago.

“The new board might have a 25% representation from brokers, while the remaining 75% will be comprised Sebi-nominated members,” said a source involved with the process. “It is likely to be a 12-member board with nine Sebi-nominated members and three broker members. There is a strong chance that BSE might depute one of its senior officials to CSE to occupy the CEO’s chair,” the source added. Efforts are also on to upgrade the surveillance mechanism at CSE.

Here again, BSE is likely to depute some members from its surveillance team “CSE already has trading, clearing and settlement processes in place. The systems have to be tweaked up a bit,” a source said.

Interestingly, CSE is one of the few regional stock exchanges (RSEs) where there is a glimmer of hope that trading volumes may improve if right steps are taken. Most of the other RSEs have attracted bids from entities, more interested in the prime real estate the bourses control.

According to reports, around 25 investors have applied for a stake in CSE. The interested parties include Emami group and some KK Birla and BK Birla group entities. Till it was dealt an irreversible blow during the stock market crash of 2001, CSE was the third-most active stock exchange, in terms of traded turnover, after the National Stock Exchange and BSE. According to Sebi, CSE reported a turnover of more than Rs 27,000 crore in 2001-02.