Regional bourses to meet against Sebi directive

The members of all the regional stock exchanges (RSEs) will meet in Bangalore and Mumbai over the next 10 days to chalk out a memorandum that they will submit to the Securities and Exchange Board of India (Sebi), demanding that the sub brokers of Sebi-registered stock exchange be exempted from a new directive.

A Sebi directive that came into force on September 23 bars sub brokers from issuing contract notes for sale or purchase of shares and making cheque payments for share transactions.

The directive, aimed at protecting the interests of investors and bringing trading in India at par with world standards, is being opposed by brokers and sub brokers.

Sub brokers will now have to enter into a tripartite agreement between a Sebi-registered broker and the client for all transactions.

Brokers here said on Thursday the members of 14 RSEs will meet in Bangalore on November 1. They will hold two meetings in Mumbai "" at the Bombay Stock Exchange (BSE) on November 7 and under the banner of the Federation of Indian Stock Exchanges (Fisa) on November 8.

"The main agenda of these meetings is finalising a memorandum that we will hand over to the Sebi. We might even consider other options including legal recourse to sort out the issue," said Anil Shah, vice president, Ahmedabad Stock Brokers' Association.

Officials of the stock exchanges in the state had met in Ahmedabad and decided to submit a memorandum to the Sebi over the matter.

"It will be difficult for the RSEs and sub brokers to function under the new system," said Atul Choksi, a stock broker and member of the Ahmedabad Stock Exchange.

The brokers and sub brokers said since the main broker does not interact directly with the clients, it will be difficult for him to provide personalised service to the client.

Also, both the depository participant accounts and bank clearing are still in the batch mode with the online clearing system available only in big cities, brokers said.

It appears as if Sebi wants just a few players as brokers, they said.

Members of the Ahmedabad Stock Exchange said in most of the RSEs, where trading is low or almost nil, the funds such as the Trade Guarantee Fund and Customer Protection Fund can be used as a guarantee under the mechanism of arbitration and grievance redressal.

"But Sebi must at least exempt sub brokers of stock exchanges registered with it," said a broker.