Regional stock exchanges in India have lost their relevance in India and the stock market regulator will actively encourage winding up of these exchanges, UK Sinha, chairman of Securities and Exchange Board of India (Sebi).
"There is no compulsion now for corporates to get listed in a regional stock exchange. These exchanges, in my judgement, have lost their relevance after we had national level exchanges that have terminals all over the country...We have also provided that if a regional stock exchange wants to wind up, Sebi will actively encourage it," Sinha said at a seminar organised by the Confederation of India Industry (CII) here today.
He added that the Hyderabad stock exchange has already been wound up and in about a week's time one more regional stock exchange will stop functioning.
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If a regional stock exchange wants to continue its operations, it will need to comply with the norms prescribed by Sebi.
"Regional stock exchanges have been in existence in India for a variety of tax and other reasons. If there are 21 stock exchanges on which there has been no trading for five to ten years, then what purpose are they serving. I have no problem if they want to exist. But our May, 2012 circular makes it very clear that risk mitigation is very important. So, a stock exchange must have a certain amount of capital. It must have a clearing corporation. There is certain amount of shareholding restrictions on broker members," Sinha said.
"But if they do not follow Sebi requirements and expect Sebi to allow them to continue in the name of SME, that is not a correct approach," he added.