BSE may reject NSE's joint platform proposal

The Bombay Stock Exchange may turn down a proposal by the National Stock Exchange to develop an electronic platform that will enable brokers of the two exchanges to trade simultaneously.

Sources close to the development told Business Standard that all discussions regarding this have been frozen following a meeting between top officials of both the bourses in March. "There was a meeting between NSE managing director Ravi Narain and BSE chief operating officer Mahesh L Soneji in March. There was no further discussion on the proposed platform after this meeting and things have not fructified so far," said the sources.

Almost six months ago, when NSE approached BSE to develop a shared platform, the latter had asked for certain technology requirements before proceeding further.

Under the proposal, the shared platform was supposed to be enabled by a software called NOW. NOW is a product of Omnysys and is partly owned by NSE. The shared platform would have enabled brokers of both BSE and NSE to deal in scrips listed on both the bourses.

However, there were concerns that a combined trading platform would throw open the identities of market makers and stocks to both the exchanges on a real time basis. This could lead to further migration of BSE-listed companies to the NSE as it was a bigger player in the futures and options market.

A source privy to the development said that in response to the NSE proposal, the BSE had mooted the idea of forming a separate 50-50 partnership firm to create and manage this platform. This move was aimed at preventing any direct control of either of the exchanges on the software and providing equal ownership to both on the management of the shared-platform. At present, about 800 BSE brokers trade online through BSE Online Trading Terminal, a software developed by CMC.

"There were concerns that governance issues would be raised since NOW was a product of Omnysys that was partly owned by the NSE. Therefore, the BSE wanted that the software for the shared platform should be developed by a neutral company," the source said.