BSE Says ‘Yes’ to USE Merger

The Economic Times - - Markets & Finance - PALAK SHAH

The Bom­bay Stock Ex­change (BSE) has agreed to merge United Stock Ex­change (USE) with it­self in a shareswap deal. Un­der the merger terms, a USE share­holder will get 1 share of BSE for ev­ery 385 shares held.

The merger will lead to di­lu­tion of around 3.2% for BSE. BSE cur­rently holds 14.56% in USE and had in­vested .` 22 crore.

“More than size, I think it is pos­i­tive for BSE in the way that both the ex­changes can now look for syn­ergy and a larger pie of busi­ness and con­sol­i­da­tion,” Ra­jnikanth Pa­tel, for­mer BSE chief, told ET.

The deal comes as a re­lief to share­hold­ers of the loss-mak­ing USE, which has seen a de­cline in turnover in the last many months. In May, USE has an aver­age daily turnover of about .` 300 crore in the cur­rency fu­tures seg­ment. On the Na­tional Stock Ex­change, the aver­age daily turnover in the cur­rency seg­ment is about .` 11,000 crore in May.

Se­cu­ri­ties and Ex­change Board of In­dia (Sebi) rules re­quire ex­changes to have a net worth of .` 100 crore at all times. USE's net worth had come down to Rs115 crore. In­dus­try of­fi­cials said USE may not have been able to sus­tain this above the thresh­old limit be­yond a few quar­ters.

Banks held around 49% of USE's eq­uity and pri­vate com­pa­nies ac­count for the re­main­ing 51%. Its pro­mot­ers in­clude Al­la­habad Bank, Andhra Bank, Bank of Bar­oda, Bank of In­dia, Federal Bank and HDFC Bank.

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