)
Even in the clamorous streets of Burra Bazaar, Asia’s biggest wholesale market, 7, Lyons Range, has stood out for its chaos.
Around 1830’s a neem tree nearby the present day Lyons Range served as a shade for intense gambling sessions. In 1928, the informal broking took shape of a formal trading platform, when Calcutta Stock Exchange was constructed. Since then, for almost six decades, an open outcry system and later a computerized system of trade, kept the street bustling with activity. In between, in 2001, surfaced a scam, but CSE steered to stay afloat.
In 2014, as the Securities and Exchange Board of India (Sebi) regulations is threatening to down CSE's shutters, efforts are on to once again bring back the clamour at Lyons Range.
In a last ditch effort to stay afloat, CSE is pitching hard for an alliance with all regional exchanges in the country. The idea, mooted to Sebi by CSE, is to project the Kolkata-based exchange as the only national exchange, aimed at regional small and medium enterprises, according to B Madhav Reddy, Managing Director and CEO of CSE.
Meanwhile, CSE is also keen to buy a stake in a clearing corporation to stay afloat, as earlier proposals to tie-up with ICCL, the Clearing Corporation of BSE, failed.
Sebi has sought a roadmap with timeline for the CSE resuscitation plan, according to sources.
Thus, after forging tie-ups with four regional exchanges--the Madhya Pradesh Stock Exchange, The Counter Exchange of India (OTCEI), Ludhiana and Bangalore Stock Exchanges to take over their operations—CSE has now proposed tie-ups with Uttar Pradesh and Jaipur Stock Exchanges.
“We have already tied up with four regional exchanges. We proposed tie-ups with UP and Jaipur Stock Exchanges. The MoUs are finalized and the two exchanges are awaiting their respective board exchanges,” said Reddy.
Under the consolidation plan with the Madhya Pradesh Stock Exchange, CSE plans to absorb its brokers, companies and employees and of the exchange. In addition, CSE also plans to open an office at Indore. In case of OTCEI, it plans to acquire its companies and members. For Lundiana and Bangalore Stock Exchanges, the plan involves migration of their listed companies to CSE.
However, CSE’s eyes are now set on bigger exchanges like Delhi, Ahmedabad and Madras Stock Exchanges, which so far have remained non-committal to the idea of an alliance on account of the uncertainty surrounding CSE.
During the 2011 Assembly elections, the ruling TMC government had proposed the revival of CSE. However, after coming to power, the state took no initiative to revive it.
Even if CSE succeeds in projecting itself as a grand alliance of all RSEs, bigger challenges would lie ahead.
Most of the RSEs are plagued by vanishing companies, which raised money through public issues almost four decades ago, but little is known about these entities.
According to Reddy, in CSE alone, of the 2500 listed companies, only 500 are compliant with present day listing norms.
“Our aim would be to clean the system, as there are so many smaller companies that vanished after raising money in RSEs. Next, we will identify good companies, like textiles companies in Ludhiana or manufacturing companies in Madras to get listed on CSE. This will bring liquidity to the system,” said Reddy.
In 2012, Sebi brought out new norms for RSEs, under which, they needed to own a trading platform, with an annual trading of not less than than Rs 1,000 crore, to stay afloat. This apart, the net worth of the exchange should not be less than Rs 100 crore, said the norms.The regulations came as a blessing in disguise for CSE, as other RSEs started working on the merger proposal with CSE.
However, in April 2013, CSE had to suspend trading as it failed to comply with the Stock Exchanges and Clearing Corporations) Regulations, 2012. So long, CSE was executing trade through its in house clearing mechanism. Earlier, CSE had sought an extension of the due date of 5th April 2013 fixed by Sebi for clearing and settlement of trades by in-house clearing house of the exchange. However, Sebi did not accede to the request of CSE and hence, the exchange had to temporarily suspend the trading in C-Star from 4th April 2013. CSE was hoping that the clearing corporation deal with fructify over the year.
