Even as Madras Stock Exchange sent a letter to the Securities and Exchange Board of India seeking to be derecognised it as a stock exchange, it began efforts to get the stocks of companies listed exclusively on it to be traded elsewhere.

Uncertain future

More than 230 companies with a total paid-up capital of over ₹920 crore are traded solely on the 76-year-old MSE.

These companies now face an uncertain future with the bourse having applied for voluntary exit last week.

The exchange has written to the market regulator seeking relaxation of norms to allow these companies to trade on other exchanges. A highly placed executive with the MSE said the effort is to make SEBI let companies with share capital as low as ₹1 crore and net worth of ₹5 crore move to other bourses.

“We are hoping some of these companies get a chance to get traded elsewhere, because they are hidden treasures. Our action is based on a SEBI circular on companies listed exclusively on non-operational exchanges, and we have asked for reduced listing fees also,” said Ramanatha N Kotagal, Managing Director of MSE. If a company wishes to get on the NSE platform, it needs to pay an initial listing fee of ₹50,000, and an annual charge of at least ₹90,000 based on the share capital.

Dissemination board

According to the SEBI circular on May 22, companies that fail to make it to other exchanges will be relegated to the dissemination board, a last resort for shareholders to sell off their units in transactions that do not offer any settlement guarantee or monitoring by the stock exchanges. A trading member with the MSE says most shares that get on the dissemination board are “dead investments” because they are seldom bought for lack of a secure trading environment.

“We do not want that to happen to our companies,” said Kotagal, who took over operations at MSE in January 2013, the time when efforts for an individual platform was kick-started.

Besides exclusively listed firms, fifty nine stocks on the NSE through an informal tie-up in 2009 are also endangered. These are available for trading only until the market regulator delivers the exit order, which could take a year from now, according to Kotagal. Though many of these stocks may not meet the listing norms laid down by national exchanges, they have garnered an overall turnover of ₹28,900 crore since their listing, said Kotagal.

‘Bad sign’

GRK Reddy, Chairman and Managing Director of MARG Group, had his company’s stock listed on the MSE-NSE platform in November 2009. He says the death of regional exchanges is a bad sign for new entrepreneurs trying to raise capital. “Regional stock exchanges are launch-pads for companies to get into the big league.”

Kotagal said the stock exchange faces closure because it could not meet the deadline to set up its own trading platform. A sincere attempt to set up an own platform brought SEBI officials to Chennai for an inspection in August 2013, but they were not impressed. “We had the capabilities to deliver a high-tech platform, but we couldn’t put our act together within the stipulated time,” said Kotagal.

comment COMMENT NOW