The Hindu Business Line : Exchange for small, mid-cap cos to be operational by Jan

INDONEXT, a separate trading platform for small and mid-cap companies, will be operational early 2005, Mr G.N. Bajpai, Chairman, Securities and Exchange Board of India , has announced. It could be operational as early as January.

All the regional stock exchanges are expected to join Indonext.

"As an initiative, Indonext would be more successful than OTCEI (OTC Exchange of India) as it would provide an excellent trading platform, and the number of scrips participating in this would be much higher," said Mr Bajpai. If existing scrips choose to list on Indonext, they will have to de-list from the NSE and BSE, he said.

Though Mr Bajpai said a technical committee is working on deciding the size of companies that would be a part of Indonext, earlier reports indicate that this is likely to be fixed at a capital base of Rs 20 crore. Issues such as final regulations that will guide listing on Indonext are also being worked out.

"There would be differences. The number and composition of board in the case of these companies need not be on the same scale as those being listed in the BSE or NSE. We are working on all these," said Mr Bajpai.

Over 4,000 companies are expected to be a part of Indonext.

"Most regional stock exchanges have shown interest to be in Indonext," said Mr Bajpai.

The number of intermediaries authorised to be a part of Indonext will be large with a strong focus on small and mid-cap companies, he said, while addressing the 2004 Asia Venture Forum. Once established, Indonext will provide an alternative platform for venture capital funded companies to go public and, hence, an exit option for venture capital funds, Mr Bajpai added. This is not expected to significantly impact trading volumes in the BSE and NSE.

"Most of these stocks are illiquid and deadwood as far as most investors are concerned. The only impact of this would be on the promoters of these companies and some regional brokers," said a BSE broker.

Regional brokers have high expectations from the initiative. In fact, they see the delay in the launch of Indonext as an opportunity lost in terms of business.

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