BOMBAY STOCK EXCHANGE

Some call it corporatisation others call it demutualisation, BSE has come a long way since it had started its journey a millennium ago. The traverse that was started as an association of four brokers sitting under a banyan tree in 1850s, became Bombay Stock Exchange (BSE) in 1875 with almost hundred members in its kitty, each having invested a priceless sum of Rs 15.

One thirty years later, conversion of BSE into BSE Ltd was a moment of great pride for all the members who have had witnessed BSE sailing through both arduous and facile times. While the erstwhile BSE has been owned and controlled by trading members for the last 130 years, this era is now a part of history. The new BSE Ltd will function as a corporate entity, where trading members will have a reduced say in its management, eligible for only 25 per cent of the seats on the board of the new company and public would now hold 51 per cent of the stake in the BSE LTD.

In its new avatar BSE as a company would now itself be listed on the stock exchanges, and its accounts would be open for public scrutiny and questioning. According to the experts the corporatisation of BSE will have a huge impact on its working culture.

The organisation, which was so far called a closed club, will now have to open up. Its books will be now scrutinised and it will have to compete for the market share.Interestingly, back in the early nineties, the reluctance of BSE members to improve governance and adopt electronic trading led to the creation of its biggest competitor, the NSE. Benefiting from demutualization and automation, the NSE was able to penetrate far deeper and make trading screens available in hundreds of towns across India. Though the BSE did wake up to these threats and went electronic fairly quickly, it lags behind the NSE in both reach and trading volumes. In the same period, all the other mutuals (regional exchanges) have become defunct for all practical purposes. The BSE, which sets, rules, regulations and bylaws which other regional exchanges, stock brokers and investors followed. In 1986, the country’s first and most popular stock market index, the Sensex debuted at 549 points. The BSE was a platform for entrepreneurs like Dhirubhai Ambani and Narayan Murthy, who built the country’s Reliance Industries and Infosys.