The Hindu Business Line : SEBI for working group on Indonext

THE Securities and Exchange Board of India wants the listing and de-lisiting norms re-evaluated by a working group in the context of the proposed Bombay Stock Exchange-Indonext trading platform.

Mr Ramu Sharma, President of the Federation of Indian Stock Exchanges (FISE), which proposed the concept of the new trading platform in collaboration with the BSE for members of the regional stock exchanges (RSEs) and all sub-Rs 20 crore capital listed companies, the working group was expected to look into the possibility of re-listing of stocks, now de-listed, on the RSEs.

"One of the important aims of the BSE-Indonext proposal is to provide a lifeline to the RSEs and increased broking business to the RSE members. The present stock listing norms do not put up a real bar for a company to delist from a RSE under whose jurisdiction the company's registered office falls," he observed.

The present norms do not recognise the old system of territorial jurisdiction of a RSE in terms of primary listing in view of an existing national on-line trading infrastructure.

"This indirectly negates survival of RSEs. This also leaves room for doubts about the viable liquidity for a new trading platform. Experience showed that the 10 heavyweight counters provide the majority of the trading volume for a bourse. If ITC is not listed on the Calcutta Stock Exchange, or Infosys is not traded on the Bangalore Stock Exchange then survival of the RSEs would remain a question mark," said Mr Ajit Day, former president (and still a member) of CSE.

Mr Sharma admitted that it was a Catch-22 situation. "However, our joint proposal underlined the viability from the cost perspective. The proposed BSE-Indonext platform envisaged using the existing infrastructure of the BSE and RSEs. Hence, a beginning could be made with mid and small cap stocks, which can provide a scale of sustainable volume in terms of operational costs," the FISE president added.

Ms Deena Mehta, former vice-president of the BSE, felt that the issue of fragmentation of broking business among the different trading platforms needs to be looked into. "Currently, a RSE member can trade on his own platform, also on the Inter-connected Stock Exchange (ISE) platform and further on the NSE platform via the subsidiary route of ISE," she pointed out.

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