The Bombay Stock Exchange has offered to share 25 per cent of the transaction charges generated in the proposed S group of shares with the regional bourses.

The offer will be on shares that are also listed on regional bourses.

The S group is being carved out by putting together shares of 2,260 companies listed on the BSE as also scrips from regional stock exchanges.

In a letter to the Federation of Indian Stock Exchanges, which is an alliance of regional bourses, BSE director for business development S T Gerela said exchanges would also continue to receive listing fees from the companies listed with them.

He, however, said that a nod from the Securities and Exchange Board of India would be needed to ensure that the basic minimum corpus of the bourses' members and the trade guarantee fund of their subsidiaries were available to the S group.

The BSE offer follows a meeting of the Fise with senior BSE officials on June 14 in Mumbai. The revised offer will now be discussed by the RSEs in a meeting in Mumbai by the end of this month. Officials from Sebi will also be present in the meeting to sort out the regulatory issues.

According to the BSE offer, all companies listed and traded on both the BSE and the RSEs that have a minimum paid up capital of Rs 20 crore would be included in a new S group.

The scrips traded in A group of the BSE would, however, not be part of this group.

All Z group scrips of the BSE and companies that have failed to pay listing fees, etc, at RSEs would be excluded from the S group.

Member-brokers of Delhi Stock Exchange said that the creation of a single orderbook for small-cap companies was the first move in the direction of consolidation of regional bourses.

"While this can termed as an operational merger, in due course, the bourses can consider a complete financial merger too," said a leading member.

The BSE has offered to include in the S group about 2,260 scrips which at present record a daily average turnover of approximately Rs 100 crore (Rs 1 billion).

Gerela expects the daily turnover in these scrips, together with the eligible scrips from the RSEs to top a daily turnover of Rs 300 crore (Rs 3 billion) in a short span.

The BSE has said that if members of the regional bourses trade through the subsidiaries of their respective exchanges, then they would continue to be sub-brokers.

If the participation is, however, through the clearing house arrangement, then the members can continue to trade as a member-broker of the RSE, subject to an approval from the market regulator Sebi.