Kolkata: German stock exchange operator Deutsche Borse Group and Borse Dubai, which owns two-thirds of the Dubai International Financial Exchange (DIFX), have evinced interest in buying equity stakes in Calcutta Stock Exchange (CSE). Their proposals were discussed, albeit briefly, at CSE’s board meeting in Kolkata on Friday.
CSE chairman Udayan Bose confirmed that two foreign bourses were keen on joining forces with the beleaguered exchange in Kolkata, but would not identify them, saying that he didn’t want to name the exchanges because talks are at a preliminary stage.
But another member of the CSE board disclosed the names to Mint on condition of anonymity. He said: “Deutsche Borse and the Dubai stock exchange have shown interest in (investing in) CSE. Chairman said discussions had just begun. We are very happy about it and keeping fingers firmly crossed.”
Turning point? Currently, the Calcutta Stock Exchange’s turnover hovers around Rs10 crore a day. ( Indranil Bhoumik / Mint)
When contacted, a spokesperson for Deutsche Borse said, “We do not comment on speculations. It is our policy to reserve our comments till a deal is signed.” In February last year, Deutsche Borse had acquired 5% in the Bombay Stock Exchange (BSE) for Rs189 crore.
Borse Dubai could not immediately be contacted. However, a spokesperson for DIFX said, “DIFX has no comments to make on the news.”
The immediate aim of the exchange, housed in a heritage building in Kolkata’s Lyons Range, is to shore up its turnover. Despite tying up with the BSE last year, which enables Lyons Range brokers to trade on Dalal Street, CSE’s turnover hovers around Rs10 crore a day at present. Until recently, CSE’s turnover was as little as Rs6 crore a day. Aggressive marketing has take trading volume up a bit in the last few days.
“Nothing will materialize unless we manage to improve our turnover. So, though we are very happy about foreign institutions taking interest in our exchange, there’s a lot of housekeeping to be done immediately,” said Ajit Khandelwal, a broker representative on the board of the exchange.
The proposals from the two foreign bourses would also have to be cleared by BSE, pointed out Binay Kumar Agarwal, another broker-director on the CSE board. “BSE (which owns 5% in CSE) is our strategic partner. Without their approval, we can’t let other exchanges to invest in our exchange,” he said.
BSE managing director and chief executive Rajnikant Patel is also on the CSE board. Asked about the interests of the foreign exchanges, he said, “It’s a very positive development, but we’ll need some time to decide what we want to do with them.”
Last year, CSE sold shares to 25 investors, including BSE, for a little more than Rs60 crore to corporatize itself. At present, 52% of the exchange’s shares are held by investors who do not have trading interest.
As part of its revival strategy, Bose said he wanted CSE to launch a derivatives segment of its own. It is understood that the foreign bourses, too, are interested in developing it using CSE’s infrastructure. But it would need the approval of the Securities and Exchange Board of India, or Sebi, the market regulator. However, getting its approval might not be easy because of the surveillance failure that led to the Rs120 crore payment crisis in March 2001, said a CSE board member, who did not wish to be named.
“We have received several proposals (from foreign bourses), but we haven’t decided yet what we are going to do with them,” Bose said, when asked why foreign bourses wanted to take equity interest in CSE.
Meanwhile, the CSE board on Friday shortlisted a chief executive. It will be forwarding his name to Sebi for its clearance. CSE was being run by Sebi-nominated officers for more than seven years. Last year, following demutualisation—or stake sale to investors without trading interest—it reconstituted its board by inducting three public interest directors.