BSE admits MSE Financial Services

By Our Special Correspondent

CHENNAI, JUNE 9. The board of Bombay Stock Exchange (BSE) has admitted MSE Financial Services, a 100 per cent subsidiary of the Madras Stock Exchange (MSE), as its member.

The BSE membership will cost the MSE subsidiary a tidy Rs.65 lakhs. Besides the membership fee of Rs. 50 lakhs, the subsidiary will have to shell out Rs. 2.5 lakhs as admission fee, another Rs.2.5 lakhs towards broker contingency fund, Rs. 5 lakhs as base minimum capital and another Rs. Five lakhs towards deposit.

The subsidiary will be a corporate entity limited by the guarantee given by MSE. Since the BSE card comes with a stipulation that the subsidiary will have to have a minimum networth of Rs. 50 lakhs, the MSE is expected to provide its wholly-owned subsidiary the requisite funds to meet this demand.

The Executive Director of MSE, Mr. Saji Cherian, expressed confidence that the exchange would be able to raise funds by way of deposits from its members to help the subsidiary get the needed money to own the BSE card. Indications are that each broker will be paying about Rs. 2.5 lakhs.

The structure of MSE Financial Services was still being worked out, Mr. Cherian said. To begin with, MSE personnel were expected to be deputed to manage the subsidiary. Mr. Cherian told this correspondent that MSE was currently upgrading the wide area network to provide BSE trading opportunities to MSE members via the subsidiary.

With the subsidiary becoming a member of BSE, members of MSE would be in a position to trade in BOLT through MSE Financial Services by becoming sub-brokers to this company, he pointed out. This would help them to access MANTRA as well as BOLT using the same wide area network.

Mr. Cherian indicated that the subsidiary company would be in a position to begin operations by August this year.

To a question, the Executive Director hoped that the volumes would pick up on MSE now that the subsidiary had become a BSE broker. Further, he expected more brokers to turn active in the marketplace. At the moment, out of 170 members, only about 90 are active on MSE.

It may be recalled that MSE was at one time toying with the idea of letting its newly-floated subsidiary to become a sub-broker to UTI Securities which has BSE and an NSE cards. This was thought of as it would not cost much for MSE. The proposal, however, was shelved as the market regulator took objection to it.

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Section  : Business
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