Mumbai: Bombay Stock Exchange Ltd (BSE), Asia’s oldest, will pick a 15% stake in United Stock Exchange of India Ltd (USX) and will jointly offer currency futures trading, said a person familiar with the development.
BSE’s board, which met on Wednesday evening to discuss this, approved it unanimously, the person said. He declined to be identified because he is not authorized to speak to the media.
BSE spokesperson Kalyan Bose declined comment.
“There have been some general discussions between BSE and us,” said T.S. Narayanasami, who on Tuesday was appointed as managing director and chief executive officer of USX. “The outcome of those meetings may be known tomorrow (Thursday).”
Joint operations: The Bombay Stock Exchange will pay around Rs25 crore for the stake in the country’s newest stock exchange. Abhijit Bhatlekar / Mint
According to the person mentioned earlier, BSE will pay around Rs25 crore for the stake in the country’s newest stock exchange. It will also provide technology and manage operations for currency futures trading while USX will do the marketing. This agreement relates to only the currency futures segment and does not include other products such as equity, and futures and options, among others.
USX said recently that it has got in-principle approval from markets regulator Securities and Exchange Board of India to start currency futures trading.
The approximately Rs9,000 crore a day currency futures market is split almost equally between National Stock Exchange Ltd and Multi Commodity Exchange of India Ltd (MCX). According to the BSE website, the last currency trades were three contracts (worth $3,000 or Rs1.44 lakh at that time) on 18 May. BSE started currency trading on 3 October.
In the past eight months, BSE has received proposals from USX and MCX for joint operations. The proposal from the latter included cooperating in equity futures and options trading as well.
BSE has been under pressure due to increasing competition from the newer exchanges. Earlier this year, it appointed Madhu Kannan, former managing director, global strategy, Bank of America Merrill Lynch, as chief executive officer to help revive its fortunes.