CHENNAI, March 30: The Madras Stock Exchange (MSE) is set to become the first major regional exchange to offer its members the option of choosing two additional trading systems - the Bombay Stock Exchange's on-line trading system (BOLT) and the Federation of Indian Stock Exchange's trading system. Members approved the proposal at a meeting on Saturday.The exchange management is now placing the matter before the governing council, which, according to sources, is unlikely to act against the wishes of the majority of the members. Once the governing council approves the proposal, steps would be initiated to tie up with BSE for BOLT and also obtain the membership of Fise.
The decision of the members follows the moves initiated by the exchange to overcome its current poor state of health. Representatives of both BSE and Fise made presentations to MSE members last month. The MSE management had left the option of choosing BSE or Fise to its members.
With the members opting for both, they would be in a positionto use as many as three trading systems - MSE's Mantrra, BSE's BOLT and Fise. The arbitrage opportunities that would present itself then would help MSE to substantially improve its trading, the members feel. They were unanimous in their opinion that "things cannot become any worse for the exchange" as a result of this move. The exchange is also putting in place the necessary infrastructure to induce confidence in the mind of the investors and the members. The clearing house is likely to commence functioning in the first week of May and the approval of a trade guarantee fund is pending with SEBI.
The decision of the members is likely to cost the exchange between Rs 70 to 80 lakh as membership fee for Fise and setting up of V-Sat uplinks and other related infrastructure. The existing wide area network of the exchange will be used for trading on Fise's system as well. MSE, which recently sold surplus land in its possession, should be reasonably comfortable in raising the required resources. Fise, as far asmembers are concerned, would not entail any significant cost except that they would have to bring in Rs 4 lakh as additional deposit to meet the capital-adequacy norms.
MSE's tie-up with BSE would not pose any monetary burden it. Once MSE ties up then it is up to the members to find a suitor in BSE on whose account they can trade. In the first year not more than 15 BOLT terminals would come up, they added. In terms of cost, a tie-up with BSE would cost the broker about Rs 3 to 5 lakh towards cost of V-Sat, software, hardware etc. However, if 10 to 15 brokers share a V-Sat, the cost of investment is expected to come down drastically to Rs 1 lakh. Proponents of BOLT opine that they can, by taking advantage of badla, draw substantial volume of trading from NSE to BSE.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
