The 128-year-old Bombay Stock Exchange is set to introduce a deposit-based membership on the lines of the National Stock Exchange.

The proposal will come up for discussion at the exchange's extraordinary general meeting.

The meeting is also likely to finalise the demutualisation plan for the exchange, in line with the recommendations of the Justice Kania committee.

The meeting will also discuss a proposal to compensate its existing members after charging other liabilities.

The exchange is planning to move a proposal to offer new, refundable deposit memberships at Rs 50 lakh (Rs 5 million), which will be valid for three years.

Although the exchange does not plan to do with away with the existing system of cards, no new cards will be issued. In other words, all new members of the exchange will have to take the deposit route if the proposal is passed at tomorrow's meeting.

The BSE's membership fees are much less than that of the National Stock Exchange, which has overtaken the former in traded volumes. The NSE charges Rs 1.25 crore (Rs 12.5 million) for membership in its cash and derivatives segment.

"We are looking for an easy entry, easy exit route for members with no strings attached. The deposit system will create a new class of membership," a BSE spokesperson said. The nitty-gritties of the scheme would be finalised at the meeting, the spokesperson added.

Once the exchange is demutualised, ownership and trading rights will be segregated among members. Members taking the deposit route can only trade on the exchange and will have nothing to do with ownership.

BSE insiders describe the move as an attempt to expand the membership of the exchange and tap the regional pockets.

"The major weakness of the BSE is that it has not moved outside Mumbai, while the NSE has tapped Delhi and Kolkata. If the proposal is passed, the members of regional stock exchanges can form consortiums and seek deposit-based membership on the BSE," a source said.

Once the demutualisation plan is passed at the extra-ordinary general meeting, it will be submitted to the Securities and Exchange Board of India.

It will also require the clearance of the Central Board of Direct Taxes. Once the legal, accounting and tax-related issues are settled, the exchange can be demutualised. It could take at least six months, sources said.

The agenda

• The proposal will come up for discussion at the exchange's extra-ordinary general meeting.
• The meeting is also likely to finalise the demutualisation plan for the exchange.
• A proposal to compensate its existing members after charging other liabilities will also be discussed.
• The exchange is planning to move a proposal to offer new, refundable deposit memberships at Rs 50 lakh, which will be valid for three years.
• All new members of the exchange will have to take the deposit route if the proposal is passed at tomorrow's meeting.
• The NSE charges Rs 1.25 crore for membership in its cash and derivatives segment.