The Hindu Business Line : After 128 years, BSE gets ready for new name, structure

MEMBERS of Asia's oldest stock exchange, The Stock Exchange Mumbai (popularly known as the BSE), are expected to change the 128-year-old exchange's legal structure and name and call it BSE Ltd in keeping with its new corporate identity.

The new entity, which is also expected to float a subsidiary called BSE Clearing Corporation Ltd, will be formed after the demutualisation of the exchange for which an extraordinary general meeting was held on Tuesday.

However, the final outcome of the meeting could not be ascertained at the time of going to press.

While BSE Ltd will facilitate trading in securities, the subsidiary will look after surveillance, risk management, clearing and settlement.

According to the demutualisation and corporatisation plan for the exchange, a public company limited by shares under the Companies Act, 1956 under the name BSE Ltd will be incorporated.

The company will be formed by appointing 50 persons (from trading and clearing members) as the First Shareholders; they will subscribe to 10,000 fully paid equity shares of BSE Ltd of Re 1 each at par in dematerialised form.

After this, every member of the exchange will be entitled to apply for 10,000 shares of Re 1 each to become shareholders of the exchange.

In case of composite membership, each person will have to buy 10,000 shares for per membership.

Interestingly, when the exchange - which germinated in the middle of the nineteenth century under a banyan tree as an informal group of traders at Horniman Circle in the city - was initially formed in 1875 with an entrance fee of Re 1 per member.

As the exchange flourished, the fee went up to Rs 48,000. At the current price, the value of a BSE membership is around Rs 60 lakh.

However, there were times when the asking price for the coveted card was almost Rs 5 crore.

In the mid-90s, the foreign brokerage firm ING paid Rs 4 crore, believed to be the highest, for a BSE membership card.

As the per the new scheme, no person can hold more than five per cent stake of the exchange's equity capital directly or indirectly or through persons acting in concert without the permission of the exchange as well as the SEBI.

To move towards demutualisation, the BSE has proposed deposit-based membership in the cash segment.

As per the scheme, each member will have to pay a refundable deposit of Rs 50 lakh to the exchange.

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