• 1988: Mahendra Kampani, the then BSE president was sacked. His crime: he initiated steps to computerise the exchange, which was disliked by a powerful broker coterie. • 1998: The BSE governing board members including its then president J.C. Parekh opened the BOLT trading system at midnight to reverse some deals and save some members involved in price rigging. That's history now. It took nearly 130 years for the BSE to transform itself. The oldest exchange in India finally shed its image of a ‘club of brokers’ last week to become a corporate or company with a professional board but sans interference from broker lobbies. The BSE — which was run by an association of brokers — was slow in changing its character. The government and financial institutions had to coax, cajole and even force it on many occasions to bring in professionalism. In the process, the exchange lost its numero uno position to National Stock Exchange (NSE). NSE’s origin in 1994 can be attributed to the reluctance of the BSE’s move towards a professional regime. BSE’s broker-dominated governing board took decisions suiting the requirements of brokers’ interests. So, investor interests were ignored. The then Sebi chief G.V. Ramakrishna had a tough time disciplining the BSE brokers. Fed up, the government set up the NSE. With institutions led by IDBI chipping in with funds, the NSE was formed and it quickly overtook the BSE through its professional and no-nonsense approach. Now it controls 71 per cent market share. The all-new BSE Under pressure, the exchange has become a corporate body, eligible for even listing on a stock exchange. As per the corporatisation and demutualisation plan cleared by Sebi, the public will have to hold 51 per cent stake in the exchange and trading members cannot hold more than one-fourth of the positions on the governing board. The corporatisation move has given a good opportunity to the BSE to regain its lost glory. Experts say that the BSE can take decisions — that too fair and impartial — faster and try to catch up with the NSE. ‘‘Corporatisation will finally bring transparency, credibility and technological innovation into the system. There are too many vested interests running the BSE as decisions and rules favour the broker community,” said Gurunath Mudlapur, Head research, Khandwala Securities. Corporatisation will also shelve a lot of moribund rules and segments in the market. It will help improve the performance of futures and spot market of BSE, which is not doing too well. This is what investors are looking for. But regaining the lost glory is going to be a tough proposition for the BSE. In the previous regime, scandals used to surface every now and then, as the BSE was owned and controlled by brokers. Shady companies were allowed to raise money and list their shares. This will now stop. As per the new rules, Sebi has overriding powers to nominate directors. ‘‘The biggest positive that BSE will see is faster decision-making, which will bring it back on track,’’ says Ambareesh Baliga, V-P, Karvy Stock Broking. BSE CEO Rajnikant Patel was unavailable for comment. The BSE has changed its structure at a time when regional stock exchanges are dying. At the same time, Sebi and big institutions are keen on having two strong bourses. The BSE now needs to pull up its socks — as indicated by Sebi Chairman M. Damodaran recently — to stage a strong comeback. For the century-old BSE, it’s better late than never. (With Smita Nair)
