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Bijoy Ghosh

Lifeline to regional SEs: (from left)The SEBI Chairman, Mr C.B. Bhave; the Executive Director, Madras Stock Exchange, Mr R.K. Pillai; the Managing Director and CEO, National Stock Exchange, Mr Ravi Narain, at a function in Chennai on Thursday, to mark the partnership of the two exchanges.

Our Bureau

Chennai, Nov. 5 The Madras Stock Exchange (MSE) has tied up with the National Stock Exchange (NSE) to enable its members to trade directly on the NSE platform. On the first day today, 10 companies were listed. In stages, more companies listed exclusively on the MSE will be traded on the NSE.

Once listing norms are met, companies listed exclusively on the MSE can also be traded on the NSE soon. The arrangement follows an agreement between the NSE and the MSE finalised today.

The 10 companies listed are: Amrutanjan Healthcare, Bimetal Bearings, El Forge, Elnet Technologies, IP Rings, Jumbo Bag, KSE Ltd, Marg Ltd, Lakshmi Mills and Tulsyan NEC.

At the event held to mark the tie-up, Mr C. B. Bhave, Chairman, Securities and Exchange Board of India, said this was a novel business model being attempted by a regional stock exchange to revive its activities. The Kolkata Stock Exchange is also attempting a similar tie-up with the BSE.

After the entry of online trading and easy access to the BSE and NSE, the 22 regional stock exchanges had become redundant. But following the amendments to the Securities Contract Regulation Act in 2004 allowing members of one exchange to enter into a contract with a counterpart in another exchange, regional stock exchanges are attempting a revival.

Mr Bhave cautioned that the success of the business model depended on keeping the “sanctity of settlement intact”. The NSE has earned its reputation over the last one decade by ensuring that a settlement is effected like ‘clockwork.’ MSE should emulate that example, he said, acknowledging that it had a reputation for prompt settlement even in the days when some regional exchanges were not known for expediting settlements.

MSE should take steps to put in place the investor protection fund, margining provisions and guarantees to protect investors, Mr Bhave said.

Mr R. K. Pillai, Executive Director, MSE, said the tie-up, the first of its kind, is aimed at reviving the trading on the 72-year-old exchange. Members will be able to trade on the NSE platform in their own names. MSE hopes to issue deposit-based memberships and plans to have over 500 members by 2011. Over 15 members are trading on the NSE now, he said.

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