The Securities and Exchange Board of India (Sebi) has proposed a common clearing corporation for all stock exchanges in the country. The proposal will be taken up at a meeting between Sebi officials and the representatives of stock exchanges in Mumbai, today.
The eligibility criteria for governing council members at all bourses is also proposed to be made uniform. Today's meeting will take up the issue, among others, for discussion, it was learnt.
The feeling within the brokers and the governing bodies of exchanges is that the idea of a common clearing corporation is impractical. A broker at the Calcutta Stock Exchange (CSE) said the proposal is unlivable in the short term, but could bear fruit in five to seven years.
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CSE president Dinesh Singhania said: "The setting up of a single national clearing corporation is possible only if we are forced to accept the uniform settlement system. Otherwise, the confusion of dealing with multiple settlement system will throw such a clearing corporation into disarray. When we are opposed to the idea of uniform settlement system, how can we even consider the proposal of a single clearing corporation for all exchanges?"
Brokers who are members of both the CSE and the National Stock Exchange (NSE) said a national clearing corporation will involve brokers who are members of big as well as smaller bourses. The value of a membership card varies widely across exchanges and in such a situation, a national clearing corporation may not be very viable, they said.
A CSE board member, who is also a member of NSE, however, welcomed the proposal and said that a national clearing corporation would ease handling of deliveries. Besides, it will solve the problem of many smaller exchanges which are not cash-rich to set up clearing corporation of their own, he said.
Several brokers welcomed the proposal and said that a system along the lines of the NSE system, with branches all over the country to receive and deliver shares irrespective of the place of transaction, will definitely benefit the brokers.
In case of inter-exchange transactions, deliveries would also be more efficient with a national clearing corporation, brokers said. This is because the deliveries can then be made to the local branch of the clearing corporation instead of sending the share certificates to the place where the receiving broker was physically located.
Detractors to this scheme, however, said it could be dangerous as too many things were being done too fast. "What works abroad may not necessarily work here. It is necessary to check whether the scheme suits Indian conditions before rushing to implement it," said a NSE broker.