Rajnikant Patel, managing director and chief executive officer of Bombay Stock Exchange, in Calcutta on Friday. Picture by Kishor Roy Chowdhury

Calcutta, Jan. 12: Bombay Stock Exchange Ltd (BSE) is looking at its corporate bond and derivatives markets to fetch a higher price for its proposed stake sale.

The recent foreign investment in the National Stock Exchange has put the valuation of the bourse at over Rs 10,000 crore. Though the BSE has the largest number of companies listed on it, the NSE scores over BSE in the derivatives segment. While the daily turnover in derivatives in the NSE hovers around Rs 30,000 crore driven primarily by portfolio investment of foreign institutions, the BSE records a daily turnover of only a few hundred crore rupees.

“The activities in our derivatives market has shown some improvement over the last five-six months with the daily turnover moving up to Rs 600 crore from Rs 200 crore earlier. The exchange has taken many measures to rev up this segment. Besides, we are also seriously looking at the recently launched corporate bond market, which is reporting a daily business between Rs 500 crore and Rs 600 crore. These two markets, particularly corporate bonds, are big-ticket markets and can improve the total turnover of the BSE significantly,” said Rajnikant Patel, managing director and chief executive officer, Bombay Stock Exchange.

The BSE is looking at the growth of its derivatives and corporate bond markets for a better valuation of the exchange and a better price for its proposed stake sale. Patel, however, declined to comment on this.

“We are in the process of completing the demutualisation before May this year. This means that the stock exchange will have to offload a 51 per cent stake to non-trading members. Many leading bourses across the world have already shown interest in picking up a stake in the BSE. But I cannot tell anything more at this moment,” he said.

According to Patel, an initial public issue of the stock exchange is also under consideration.

“BSE currently has an equity capital of Rs 73.5 lakh, which is entirely owned by the member-brokers,” Patel said. “However, domestic financial institutions will also be made shareholders before the completion of the demutualisation process,” he added.

The equity capital of the BSE comprises 73.5 lakh shares with a face value of Re 1 each. The stock exchange, however, will need to have a minimum share capital of Rs 3 crore if it floats a public issue. This means that it will have to issue bonus or rights shares to the existing shareholders (member-brokers) in addition to fresh equity to the public.

But the board of the exchange has only three months to take a decision on this.

Besides, there are brokerage houses of a number of foreign institutions, such as Merrill Lynch, Morgan Stanley and HSBC, who are also members of the BSE. It has not been confirmed as yet whether their shares will be considered as foreign or Indian.