SEBI has allowed Hyderabad Stock Exchange to exit its business, while Cochin Stock Exchange has decided to close shop and awaits market regulator approval.

In May last year, SEBI had stipulated that only those exchanges with Rs 100-crore net worth and Rs 1,000 crore annual turnover would be allowed to operate.

Exchanges falling short of this requirement were given the option to either exit or meet the criteria or else face compulsory de-recognition.

HSE had applied for closing down voluntarily.

The SEBI appointed valuation agency (K.Prahalad Rao & Co) found that the exchange had paid its dues to the investor protection fund (Rs 3.09 crore), the investor service cell and to SEBI (listing fee and annual regulatory fee).

In addition, the exchange was found to have enough funds to service shareholder contribution and income-tax dues.

HSE had also shifted three companies — Pantex Geebee Fluid Power, Kanakavarsha Securities and CMH Tools — listed exclusively on it to the BSE. It has paid the requisite fees for this to the BSE. The exchange had also as paid an amount of Rs 1 crore to SEBI for resolving future investor complaints. Finding it a fit case, the SEBI allowed the exit process.

Meanwhile, the officiating Executive Director of the Cochin Stock Exchange, Francis Lewis, confirmed to Business Line on Monday that the board of the de-mutualised bourse had already taken a formal decision to exit and communicated its decision to the market regulator.

“However, the exchange’s wholly-owned subsidiary Cochin Stock Brokers Ltd will continue to exist,” Lewis added. This functions as a broker of the NSE and the BSE.

The general body of members had permitted the exchange board to take a decision on the issue.

Established in 1978, the Cochin exchange took the exit decision in view of new steep net worth and capital adequacy guidelines for a RSE.

(This article was published on January 28, 2013)
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