Soon, you could own BSE and NSE

The Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) could soon be given the go-ahead to list their shares on the respective bourses. Market regulator Securities and Exchange Board of India (SEBI), after a recent board meeting, has made public how the structure of a self-listed stock exchange should look like. It suggested the company model for the exchanges, which would require them to form a subsidiary for monitoring any conflict of interest.

The listing of a stock exchange is important on two counts: It will provide an exit route to the existing investors and allow raising of funds for expansion. The BSE has already approached SEBI for an initial public offering (IPO). This could make the BSE India's first listed exchange. Experts don't rule out the NSE also tapping the markets once the listing guidelines are in place. Indian stock exchanges are expected to command a higher price to earnings (PE) multiple than their international peers.

"Globally, stock exchanges command PE multiples of 15-20, but Indian exchanges can get a premium over this, given their growth prospects," says Nikhil Vora, Managing Director (Research), IDFC SSKI Securities. NSE's market value could be over Rs 10,000 crore on a PE of 20 and BSE can command a valuation of around Rs 2,250 crore.

SEBI's Proposal

• An exchange should form a subsidiary which will regulate securities listed on the bourse.
• Subsidiary will also monitor and handle conflict of interest arising out of self-listing.
• The subsidiary Board to have 2 exchange directors and 3 independent directors.