On August 7, the Reserve Bank of India [Get Quote] and the Securities and Exchange Board of India cleared the guidelines for currency futures trading. Exactly six days later, the National Stock Exchange got the market regulator's approval to start such trading and is scheduled to kick off currency futures this Friday.

Compare this speed with what's happening at the Bombay Stock Exchange. While Sebi has also cleared the Multi Commodity Exchange's proposal to start currency futures, Asia's oldest stock exchange is still waiting for a green signal. BSE is currently working on its trading platform and putting together a risk management system and a marketing campaign for members, said a source in the know.

A currency future is a forex derivative contract to buy or sell one currency against other on a specified future date, at a price decided in the contract. While nobody is willing to officially comment on the reasons for the delay in the clearance for BSE, a few member-brokers say the exchange took an unduly long time in forwarding its currency derivatives application to Sebi. In fact, BSE's application was the last one to be received by Sebi, brokers say, adding the delay may prove costly in the long term, these brokers said.

It's not the first time that BSE has failed to seize the initiative. Take equity derivatives. BSE introduced equity derivatives on June 9, 2000. Three days later, NSE introduced "Nifty futures" that went on to corner a major chunk (over 95 per cent) of the turnover. NSE was also first given permission to aggressively expand its operations outside Mumbai city limits while BSE could not do this for months.

"This resulted in most stock brokers registering with NSE, while the BSE equity derivatives segment found no takers. Brokers simply saw no point in making dual registrations as the fees and margin money are quite high," recollects Kisan Ratilal Choksey, one of the oldest members of BSE.

History could repeat itself in currency futures trading too, Choksey said, as volumes would be hard to shift. In the cash segment too, BSE is suddenly showing its vulnerability. The market share of BSE in cash has slipped from 47 per cent in 2000 to 30 per cent in 2008.

BSE's internal problems are certainly not going to help. The exchange recently saw a spate of resignations from its board, including its Chief Operating Officer Ashok Raut and CEO Rajnikant Patel. Excessive interference by brokers in the day to day functioning of the exchange is also cited as the main reason why BSE has been seen to be dithering over important decisions.

MS Narasimhan, Professor at IIM Bangalore, says "What is required is the right set of people in the board (non-broker member-shareholders, broker-member shareholders and Sebi nominees). Just one good board is adequate to set right the governance standards. This is the problem of transition (broker-controlled exchange to corporate entity) and it has to be handled carefully."

But M R Mayya, former executive director of BSE, begs to disagree as stock brokers do not always influence the board in a negative way. "Brokers' influence on the exchange is not always to the disadvantage of the market. In fact, there is no democratic functioning in NSE. It has management and advisory committees," Mayya says.

Some also feel the exchange can still bounce back. The recent induction of representatives of Deutsche Borse and Singapore Exchange (both holding 5 per cent stake each) into the BSE board is likely to open a fresh chapter in the history of the 138-year old exchange, BSE supporters say.