Regional exchanges told to be aligned with BSE or NSE

Now that the Securities and Exchange Board of India (Sebi) has cleared the way for closure of several defunct regional stock exchanges (RSEs) by allowing voluntary exits, the latter can go for tie up with national bourses — if they want to survive — under Section 13 of the Securities Contract Regulation Act.

Already, the Madhya Pradesh Stock Exchange and Calcutta Stock Exchange have tied up with both BSE and NSE, while the Madras Stock Exchange has a tie-up with NSE.

Otherwise, Sebi is clear that a bourse without any trading at its own platform or where the annual trading is less than Rs 1,000 crore may opt for voluntary derecognition and exit.

In all, there are 16 Sebi-recognised RSEs in India, including the Bangalore Stock Exchange, Calcutta Stock Exchange (CSE), Delhi Stock Exchange and Ahmedabad Stock Exchange. Hardly any trading goes on in any of these RSEs, besides the Inter-connected Stock Exchange (ISE) and OTC Exchange of India are defunct bourses for all practical purpose. It also said the mechanism of the dissemination board at the exchange is decided on the lines of the bulletin board with regard to an exit option to shareholders of exclusively-listed companies.

Also, Sebi said trading members of the de-recognised exchange will continue to avail of trading opportunities through its existing subsidiary company, which will function as a normal broking entity of a national exchange, such as BSE and NSE. Further, Sebi gave three years to stock exchanges to meet a minimum net worth of Rs 100 crore, an increased requirement which a lot of RSEs may find it difficult to achieve, aver experts.

On treatment of assets of derecognised exchanges, the Sebi board decided on certain conditions such as payment of statutory dues to Sebi or government and contribution of a certain percentage of the assets towards the Investor Protection and Education Fund. Trading members of the derecognised exchange may continue to avail trading opportunities through its existing subsidiary company which will function as a normal broking entity at those exchanges having nationwide trading terminals.