NEW DELHI, July 8: When the governing board of the Delhi Stock Exchange (DSE) finalised the agreement with Hughes Escorts Ltd for 200 VSATs (very small aperture terminals), it probably did not anticipate the rush of applications from broker members. In less than a week, the stock exchange has received as many as 200 entries for installing VSATs in Delhi alone.

``The response to the VSAT in Delhi alone is amazing. Against our target of 200 terminals for the entire year, cheques for 50 VSATs are already in. Applications for another 100-150 VSATs have also been received,'' says a senior DSE official. At present, the exchange has 375 members.

The enthusiastic response to the VSATs offered by DSE is understandable as the bourse is offering the cheapest VSAT package among stock exchanges. It is charging members a deposit of 1 lakh per terminal and Rs 3,500 as monthly recurring charges. Rivals, BSE and NSE charge much higher - Rs 5 lakh & Rs 1.5 lakh and Rs 2 lakh & Rs 60,000 respectively. ``The low charges can be attributed to good financial packaging and negotiations with service providers. Also, we were the last major stock exchange to opt for VSATs, so it was a do or die situation for the vendor,'' says the official.

While the official denied any kind of subsidisation by the exchange, marketmen are of the view that it is impossible to provide these services at such low costs without subsidy. According to them, the exchange is amortising the fee paid to the vendor on a longer period. For instance, if the exchange is paying an X amount to the vendor for a ten-year period, it will recover this amount by charging its members for a longer period life, albeit at lower rates. This means, the exchange will now be paying out of its pocket and will be repaid by its members later.

The move to price the terminals at such lower rates is basically to check the mushrooming of NSE terminals across the country as well to ward off competition from BOLT. The idea is to provide terminals at low cost so that it is easier to break-even even in poor market conditions and, at the same time, have a wider reach.

The Delhi Stock Exchange plans to target the rich northern belt of Punjab, Haryana and Rajasthan where investors, at present, have to go through a number of brokers. Exchange authorities also hope to expand to other regions within two months. According to sources, with the VSATs in place, DSE will also save on the high rentals it is currently paying for its office space at the Indira Gandhi Stadium. ``We are encouraging members to move out and with the VSATs, we now require only 1,800 square feet of space which is not too difficult to find,'' adds the official.

The DSE authorities are currently working on the Trade Guarantee Fund (TGF), a pre-requisite for Sebi's approval for the DOT expansion. The TGF proposal will be placed before the board in its forthcoming meeting on Friday. While officials refused to divulge the financing arrangement, sources say, DSE is targeting a corpus of nearly Rs 100 crore. DSE also plans to offer value-added services to its members with facilities like jobbing, two-way quotes and quotes of other markets. Last week, for instance, auction trading on the exchange went on-line.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.