CSE to tie up with a clearing corporation

The Calcutta Stock Exchange is expecting to sign an agreement with a national clearing corporation shortly to ensure the exchange's continuity. The latest Securities and Exchange Board of India guidelines for risk management and mitigation have brought in required clarity and paved the way for such a tie-up.

At an Indian Chamber of Commerce & Industry event on corporate governance for building investor confidence, Madhav Reddy, Managing Director and Chief Executive Officer of the CSE, said on Saturday: "We are in talks with a clearing corporation, which is expected to take a formal call on the proposal."

The old regional exchange's survival is at stake as it could not transfer clearing and settlement functions to a clearing corporation in absence of clarity on risk measurement issue. The recent SEBI clarification made it not only measurable but also practicable for the exchange to transfer such risk to a clearing corporation with necessary in-built financial safety mechanism.

Meanwhile, a NSE official present at the function said soon a formal notification would turn the corporate governance norms, currently a subject of listing agreement, into SEBI regulations. This would mean that the market regulator would be responsible for monitoring non-compliance of the corporations.

Sutanu Sinha, member of the National Foundation for Corporate Governance said there was a need for an early warning system at the national level for detection of corporate mis-governance. "The Ministry of Corporate Affairs uses a statistical tool to occasionally generate alerts on unusual corporate numbers. But its restricted use does not qualify it as an national alert generator". He felt that secretarial audit was also not designed to generate alert on corporate misdemeanor.

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