As was widely expected, the shareholders of the Bangalore Stock Exchange (BgSE) unanimously approved the “voluntary dissolution” of the 50-year-old regional exchange on Saturday. The Annual General Meeting, which was attended by 100 out of the 925 members, authorised the management to apply to the Securities and Exchange Board of India (SEBI) seeking its approval for the exit. “The formal letter to SEBI would be sent on Monday,” said a senior BgSE official. Saturday’s authorisation was a mandatory requirement, which would pave the way for the exchange’s eventual exit.
C. Subramaniam, Chief Operating Officer, BgSE, told The Hindu that the AGM also decided unanimously to explore various options for the exchange company to enter into “non-exchange activities.” It appointed a four-member steering committee, working under the company’s board, to explore these options.
A top source said one option is for the exchange company to enter into the Non Banking Finance Company (NFBC) space, but this will depend on various “contingent approvals,” primarily those pertaining to regulations of the Reserve Bank of India.
“The resolution was not unexpected because the exchange had become irrelevant because of the developments in the last two decades,” said a participant at the AGM. He said trading on the regional exchanges had become “puny” because the larger exchanges such as the National Stock Exchange and the BSE dominate the scene. Moreover, the proliferation of online trading, especially those linked to the two major bourses, had affected the regional exchanges adversely, he said.
Ramalinga Raju, who was the president of the BgSE between 1993 and 1995, recalled that the exchange was the first in South India to start screen-based trading.
BgSE’s subsidiary, BgSE Financials will continue as an “independent corporate broking entity,” Mr. Subramaniam said.
Mr. Raju said the future course of action would depend on the decision of the sub-committee. If the company is unable to find a viable business activity to pursue, its assets would be distributed to shareholders, he said. This includes the BgSE’s property on JC Road, which functions as its headquarters and a plot on Infantry Road, said a member.