The regulator is learnt to have asked the Bangalore Stock Exchange (BgSE) officials to revise the equity structure of its recently-floated subsidiary viz. BgSE Financial Services Ltd.

At present, BgSE holds a 55 per cent equity stake in the subsidiary, while the balance 45 per cent is held by the members. In a September 1999 notification, Sebi had permitted bourses to go in for subsidiaries, subject to condition that the parent exchange holds a controlling stake of at least 51 per cent.

The current directive means that BgSE will have to subscribe to the full equity of Rs 10 crore. BgSE president Pankaj J Shah told The Financial Express that the bourse has already submitted a letter to Sebi seeking a revision in its decision. ``We are expecting a favourable reply from Sebi in this regard soon,'' Shah said.

Sebi is of the view that the bourse subsidiaries should be fully-owned by the regional exchanges for more autonomy and fuelling the cash flow for expansions. According to BgSE officials, the notification may put a halt to the ongoing expansion plans of the subsidiaries of many regional bourses. BgSE Financial Services was planning to acquire trading membership on BSE, NSE and all other exchanges deemed fit and offer different trading platforms to its members.

The bourse was also planning to take up Depository Participant (DP) services, in a bid to serve investors directly rather than through other DPs. Though the company was floated, BgSE Financial Services is yet to finalise its own head. The subsidiary firm is likely to have a separate office and its own administrative personnel.

As per the game-plan, BgSE Financial Services would work in tandem with the bourse and in order to avoid conflict between the firms, there would be some kind of distance. The proposed access to multiple trading platforms would help member brokers enhance their trading capability, which in turn will help regional investors in Karnataka and Bangalore.

Meanwhile, BgSE has drawn up a multi-pronged strategy involving plans for being a listed profit-driven corporate entity by 2005. The exchange is also planning to become one of the largest brokerage houses in the country through strategic alliances at the national as well as global levels, by providing multiple markets and financial products.

The bourse is also expecting to achieve equity trading volumes of around Rs 1,000 crore per day by the year 2005. It was also aiming at a gross income of Rs 100 crore comprising of Rs 50 crore from trading, Rs 20 crore from clearing corporation, Rs 10 crore from DP & banking services, Rs 10 crore from management services and Rs 10 crore from other activities.