BSE appoints panel to select i-bankers for IPO

Asia's oldest exchange, BSE has appointed a panel to select investment bankers for its public issue, which is slated to hit the markets in the first half of next year.

Mumbai: Asia's oldest exchange, BSE has appointed a panel to select investment bankers for its public issue, which is slated to hit the markets in the first half of next year.

In an interview, BSE MD & CEO Ashishkumar Chauhan said the panel and the i-bankers will fix the IPO issue price.

He, however, refused to disclose to IPO issue size.

The BSE, which had reported a net profit of Rs 178 crore on a revenue of Rs 578 crore last fiscal, will be the first bourse to go public in the country.

Market sources said the IPO may fetch Rs 800-1,000 crore.

The regulator Sebi had this June notified new rules for ownership and governance of bourses, including norms for their listing, which bans self-listing.

The IPO is primarily aimed at giving an exit to existing shareholders who hold over 41 percent of equity.

The BSE, which again retained No 1 slot as world's largest exchange by number of companies listed, has said F&O investors and brokers can save up to Rs 1,400 crore annually by trading on its platform due to lower fees that are 95-99 percent cheaper than the two rivals.

"If futures and options investors and brokers use our platform, they can save at least Rs 1,000-1,400 crore by way of brokerage charges every year. Our rates are 95-99 percent cheaper than the other two bourses," Chauhan told PTI over the weekend.

He also said that people only see that BSE has spent Rs 100 crore as incentives for derivatives in the past one year, but not many know that trading on its platform could help save around Rs 1,400 crore for the industry.

While BSE charges Rs 5,000 as membership fee, NSE and MCX-SX charge Rs 5 lakh each, he said, adding "the transaction cost on the BSE is up to 99 percent lower than the market leader. Again, our membership cost, including refundable deposits is 90 percent lower than that of rivals."

After the membership fee cut last year, the BSE attracted over 500 brokers and has a total of around 1,500 registered members.

Similarly, its derivatives volumes have seen a major spike since the incentives programme and a few months back it had been 50:50 between BSE and the NSE, which has averaged out to Rs 20,000-25,000 crore daily since then or about 25 percent. However, the BSE is the third largest equity options trading place in the world today.

Stating that BSE's efficiency has improved manifold over the past couple of years, he said BSE has been able to cut trading speed from 300 milliseconds to just 10 milliseconds.

Chauhan, who has played a key role in putting in place a robust technology platform at BSE since 2009 as the deputy MD and CEO, admitted that entry of privately-promoted MCX-SX will increase competition and the resultant challenges for his bourse.

Chauhan, an alumnus of IIT Bombay and IIM Calcutta, said his focus will be not to fight competition but try to increase the investor base.

"On an average, we conduct 1,500 investor classes a year and in the past one month alone, we attracted 25,000 new retail investors, against 2,500 in the past one year. So, our strategy to increase distribution and take it to the smallest of towns and cities is on the right track," he said, and sounded bullish that BSE will be the most exciting trading venue for the next decade.

BSE's consolidated operating cost in FY12 was Rs 248 crore, including the cost of depositories, clearing and settlement and technology services.

On the first country's first the SME platform which the BSE launched in the middle of this year, Chauhan said the SME segment has seen 11 IPOs on the BSE and there are 50 market-makers giving two-way quotes constantly during the day.

When asked why BSE, which currently has 28 indices, badly lags NSE on cash-market, he said it had a legacy issue of liquidity but of late it has rapidly improved. He also said the high statutory cost on cash equities for the declining volumes in the market.

While stock trading attracts securities transaction tax of 0.01-0.025 percent, he said there is no such tax in the commodity segment, leading to a shift in volumes from equities to commodities and investors are finding it more attractive to trade in the domestic market.