BSE calls off NMCE stake buy plan, Rel Money may move in

MUMBAI : The deepening internal crisis at the Bombay Stock Exchange (BSE) appears to have had an impact on exchange’s plans to foray into the commodities market.

Asia’s oldest stock exchange has reversed its decision to buy a 26% stake in Ahmedabad-based National Multi-Commodity Exchange (NMCE), according to officials familiar with the development.

The Rs 35-crore deal could not be operationalised even after five months of signing the agreement between the two exchanges.

An official with knowledge of the deal said that the transaction had been kept on hold for a long time, primarily due to serious differences among BSE board members over functioning and decision-making in the management.

These differences have led to the resignations of non-executive chairman Shekhar Dutta, managing director Rajnikant Patel and director Jamshyd Godrej.

“The deal has been in limbo because of some legal compliances which could not be followed. Its failure is nothing to do with the current crisis in the BSE management,” said a BSE board member.

After the completion of the process of corporatisation and demutualisation, the going has not been smooth for BSE, which has caused concern among broker-shareholders and strategic investors. The BSE management has not been able to address key areas of concern, particularly the dormant F&O segment.

This has dampened exchange’s growth and reduced competitiveness, according to stock brokers. While confirming that BSE has dropped its plans to acquire a stake of 26% in NMCE, its managing director Kailash Gupta declined to elaborate on the reasons for this development. However, he said, “They may have some internal problems.”

Reliance Money, a securities brokerage and distribution company of the Anil Dhirubhai Ambani Group, had showed an interest in acquiring a 26% stake in NMCE last month.

Mr Gupta said that with the BSE calling off the deal, there is a possibility that Reliance Money could acquire a 26% stake in NMCE subject to regulatory approvals.

He said that the issue was still being discussed with other shareholders regarding the shareholding pattern.