The Calcutta Stock Exchange (CSE) has provided a lifeline to 17 regional stock exchanges (RSEs) and their 4,000-odd broker members. RSEs are slated for a slow death and most of the brokers face a bleak future.
The CSE, the only regional stock exchange to meet the SEBI-set turnover and networth criteria, has offered to create a new category of brokers. The proposal suggested direct access for the RSE brokers to the electronic trading platforms available for a CSE member.
Sorts out issue
This proposal sorts out the vexed issue of asset distribution of RSEs, according to sources involved in development.
SEBI has already derecognised four, and 16 are not operational as they could not have their own trading platform.
The market regulator was considering the CSE proposal for “creation” of a new member category — “R” denoting “regional” — through which it can provide direct membership to RSE brokers, the CSE board Chairman, Sunil Mitra, said.
Exit process
SEBI in June set the deadlines for de-recognition and exit process of RSEs. Meanwhile, it has ensured compliance of its other diktat that all broker-directors on RSEs should be off from the RSE boards from Thursday. Sources in the market regulator said all RSEs have complied with this regulation.
SEBI ruled that an RSE without any trading at its own platform or having trading less than Rs 1,000 crore has to exit.
“If the stock exchange eligible for voluntary de-recognition is not able to achieve a turnover of Rs 1,000 crore on continuous basis or does not apply for voluntary de-recognition and exit within a period of two years from the date of notification, SEBI shall proceed with the compulsory de-recognition and exit of such stock exchange.”
The regulator did not leave any options for majority of the RSEs, said the President of the Federation of Stock Exchanges (FISE), R. Sabarwal. According to FISE, which recommended the CSE proposal to the RSEs for consideration, it is a viable option.
“It eases the asset distribution process of an exiting RSE and provides a window of opportunity for the brokers”, said S.K. Kaushik, Vice-President of FISE.
The members of RSEs, according to the offer, may continue with their existing SEBI registration and follow the present applicable base minimum capital and networth requirement of their respective bourses.