The Hindu Business Line : CSE, BSE seek nod for platform sharing

If the joint proposal by the BSE and the CSE on platform sharing gets the Securities and Exchange Board of India nod, it will allow a CSE member to trade directly on the BSE without being a member.

An MoU, which was signed on July 30, is now being vetted by the market regulator. The in-principle agreement, among other things, envisages issue of contract notes by a CSE broker. The proposed arrangement, however, would subject such a transaction to dual transaction fees — both by CSE and BSE.

Though the settlement of trades generated by the CSE on the BSE would be done by the CSE, the risk management and surveillance would entail shared responsibility.

The BSE brokers, on the other hand, get access to the 1,975-odd exclusively CSE listed stocks over and above the common list. The CSE-listed companies would be put in a permitted category on the BSE for trading sans listing fee.

The CSE, which today completed its de-mutualisation process, has lower listing fees than the BSE and much lower entry-barriers for listing.

After the market regulator decided not to encourage forming of a synergy between BSE and NSE with other regional exchanges albeit through a subsidiary route, SEBI is yet to form an opinion on the issue.

Earlier, the trading members of the BSE had reservations against such a direct access by a regional stock exchange broker on the BSE platform on the plea that it would affect their business directly.

The BSE sources told Business Line that the member-representatives on the BSE board had expressed their reservations at the meeting, which cleared the proposed arrangement with the CSE. Interestingly, though such an arrangement woul d increase BSE’s volume, individual BSE brokers, who now get businesses from Kolkata might see fall in such transactions.

The BSE brokers fear that an arrangement with one regional stock exchange would open up the floodgate, as all other bourses would like to have such arrangements with the BSE.

On another level, BSE is still struggling to catch up with the NSE in terms of turnover, particularly in the derivatives segment, might get a level playing field, one BSE official pointed out.

A SEBI official said the market regulator would have to take a balanced view in terms of viability of the regional exchanges, an even growth of the secondary capital market and the convenience of the investors as also companies.

Currently, CSE has some 900-odd members, but only a handful of them are active.