Following in the footsteps of the upstart rival Multi Commodity Exchange, the Bombay Stock Exchange – Asia’s oldest bourse – plans an IPO next year.

The bourse’s listing will be the first such since the Securities and Exchanges Board of India passed a rule in April allowing the practice, subject to certain constraints, including that they list on a different exchange and that 51 per cent of the company be publicly held.

The first Indian exchange to list was MCX, which earlier this year issued an IPO that was 53-times oversubscribed, but is unaffected by the Sebi rule as it is overseen by a separate watchdog.

“We are looking at getting listed on one of the stock exchanges. We have even set up an IPO committee in this regard, which will prepare the draft red herring prospectus too,” Ashishkumar Chauhan, interim CEO, told a conference in Chennai, according to the Financial Express. “We hope to get listed in the first or second quarter of [2013] and will come out with an offer of sale. We are a cash-rich exchange and want to give investors an exit route. An IPO would be the best option.”

A BSE spokesman confirmed that the exchange is looking to list sometime in 2013. Singapore Exchange and Deutsche Bourse are both strategic investors in the exchange, though they will continue to be restricted to a 5 per cent stake.

Analysts said the BSE’s listing is likely to be followed with great interest, not only because it has been long in the works, but because exchanges are a unique investment opportunity that come around quite rarely. Deven Choksey, managing director of KR Choksey, said that such interest will only be followed through on if there is clarity on the exchange’s business model.

“I think people would expect clarity [on the business model] – which segment of the customer class you want to target,” he said. “As of now both [the BSE and its larger rival, the National Stock Exchange] has a kind of ‘me-too’ platform and approach – they don’t have any exclusivity vis-a-vis each other.”

The BSE does not have the benefit of already being a market leader, as MCX and NSE do. MCX is India’s largest (and the world’s fifth-largest) commodity exchange with an 87 per cent market share. NSE dominates the derivatives market. The BSE will need to prove it has a model that differentiates it from it’s Indian competitors.

Thus far, the BSE has not done that – but with the listing it has long desired in the offing, the bourse may find that now is the time.

Related reading:
India bourse chiefs barred from shares, FT
Quick View: MCX’s uphill battle in India, FT
Indian equities: time to jump in? beyondbrics