Bangalore, Madras stock exchanges to merge

The Bangalore Stock Exchange (BgSE) will be merged with the Madras Stock Exchange (MSE). The combined entity will become the single largest regional exchange in the country with over 1000 local companies listed exclusively on it.

As per a June 2012 notification from the Securities and Exchange Board of India (SEBI), individual stock exchanges should maintain a minimum liquid networth of Rs 100 crore and exchanges that do not comply with this requirement would be forced to close down their operations by June 2015.

BgSE and MSE together have a liquid networth of around Rs 50 crore while another Rs 50 crore will be raised by liquidating certain idle assets (situated in Bangalore and Chennai) of these exchanges. BgSE executive director Manjit Singh told TOI: "We are trying to pool the total networth of both the exchanges to gain required size to comply with the regulatory guidelines.''

BgSE has already engaged a leading consulting firm to look into the legal and jurisdictional issues relating to the merger process as these exchanges are registered in two different states, Karnataka and Tamil Nadu. The exchanges have signed an in-principle agreement for the merger while an MoU will be signed within a month once the consulting firm completes its due diligence. SEBI has also started examining issues including what status (national or regional) to be given to the merged entity as there is no precedence of stock exchange merger yet in the country.

The merged entity will emerge as the only functional exchange in the entire south. All small and medium companies that are planning to be in the public market can be on it. Currently, many local companies listed on national stock exchanges are not able to get adequate attention from investors due to lack of awareness,'' said Subramaniam C, COO, BgSE.

It is 50 years since the Union government recognized BgSE.The exchange was set up in 1963 by a group of eight visionaries.

BgSE Financial Services and MSE Financial Services, the subsidiaries of BgSE and MSE, will also be merged and would become an independent broking house.

Globally, stock exchanges are going through a consolidation period. It's most evident in the US and European markets. When the National Stock Exchange and Bombay Stock Exchange allowed terminal trading some 10 years ago, the transaction volumes on regional exchanges reduced drastically. The country has 17 regional exchanges including the ones in Bangalore, Chennai, Delhi, Kolkota, Ahmedabad etc. All these are facing survival challenges today.


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