The United Stock Exchange (USE) saw its full-year losses widen to about Rs 19 crore in the fiscal ended March 31, 2011, with interest income from fixed deposits accounting for over 96 per cent of its revenue.
The country’s newest stock exchange has posted a revenue of Rs 8.29 crore for the 2010-11 financial year, which included about Rs 7.98 crore (96.2 per cent) as income from interest on surplus funds kept in bank fixed deposits.
The exchange said that since it is yet to levy any transaction charges, it ended the 2010-11 fiscal with a net loss of Rs 18.76 crore. Together with a brought-forward loss of about Rs 14.5 crore from the previous year, the aggregate loss carried to the balance sheet as on March 31, 2011, was Rs 33.27 crore.
These accumulated losses have led to the USE’s net worth coming very close to the minimum requirement of Rs 100 crore for a stock exchange. As of March 31, 2011, the USE’s net worth stood at about Rs 124 crore.
Rival MCX-SX, which is present only in the currency derivatives market like the USE, had a net worth of about Rs 256 crore as of March 31, 2011.
The net worth of the two established exchanges, the BSE and the NSE, stood much higher at Rs 2,029.14 crore and Rs 2,988.40 crore, respectively, as of March 31, 2011.
As per its financials for the fiscal 2010-11, the USE’s total revenue rose from Rs 1.83 crore to Rs 8.29 crore, which was mainly due to interest income, as the exchange does not levy any transaction charge on trading on its platform.
The exchange said it is not levying transaction charges as part of efforts to attract and retain business volumes in its nascent stage.
Mr T.S. Narayanasami, who recently quit as USE Managing Director, is said to have had differences with some promoters and other top executives on issues like transaction charges.
He had said in August that the USE would hold a board meeting by the month-end to decide on transaction charges, but the exchange is yet to charge anything for this market segment. Two of its rivals, the NSE and MCX-SX, have already begun levying a fee.
There have also been reports about a conflict of interest and a possible breach of fair trade practices due to one of its largest shareholders, Jaypee Capital, being a major trader also on the exchange.
The reports have said that about 80 per cent of currency derivatives volumes on the USE come from Jaypee Capital alone.