"The BSE, which is an unincorporated body, will become a company under the Companies Act by the end of this fiscal, which will enable it to leverage on the benefits like the ability borrow money to spur faster growth of this exchange," BSE president Anand Rathi told The Financial Express, in a free-wheeling interview here on Monday.

"The corporatised BSE would also seek to forge tie-ups with international stock exchanges, with cross-holdings when necessary, leading to promote cross-trading of shares of many exchanges in India," he said and added that this move was also intended to achieve the motto "to become an exchange of choice from India by 2005".

The exchange is in talks with Nasdaq, New York Stock Exchange, Hong Kong and Australian Stock Exchanges, and agreements with at least two of these stock exchanges will be singed by March 2001, Mr Rathi said. It had already entered into a memorandum of understanding (MoU) with the London Stock Exchange, Chittagong and Colombo Stock Exchanges.

"As an unincorporated body, the exchange could not seek loans from the banks at present. And by incorporating under the Companies Act it would be eligible to borrow the required funds for giving more flexibility to the exchange in drawing up new strategies," he said.

Corporatisation would result in delinking ownership from trade rights of the members, which would make it possible to improve the efficiency of the organisation. BSE would kick off modified carry forward based trading under the continuous rolling settlement system anytime after the third week of November, Mr Rathi said and added that the mock trading in five scrips was already underway since October 30.

If implemented, the exchange would be a step ahead of its competitor, the National Stock Exchange, which would be ready with the needed software for the rolling settlement under the Automated Lending Borrowing Mechanism (ALBM) by November-end.

"Mock trading under the continuous net settlement (CNS) is scheduled to begin in December 2000 and trading under CNS will begin in January 2001," Mr Rathi said.

The premier stock exchange is also set to make a debut into debt trading having got the Reserve Bank of India's permission to this effect. Mr Rathi blamed the discriminatory attitude of the market regulator in delay in granting permission to the BSE, though the NSE was granted the same in November 1994 and Over the Counter Exchange of India (OTCEI) in October 1997. As part of the plan to strengthen the derivatives segment, BSE was in talks with the Sebi and RBI for the launching of forex based derivatives and the interest rate derivatives, Mr Rathi said.