The 100-year-old Calcutta Stock Exchange (CSE) has chalked out a revival strategy entailing launching a broking arm to generate a stable revenue stream.
CSE Capital Markets, a 100 per cent subsidiary of CSE with a net worth of Rs 5 crore, has already got a provisional approval from the National Stock Exchange (NSE) to start a broking business. The Securities and Exchange Board of India’s approval was expected in the next two-three months, according to Molly Thambi, managing director and CEO, CSE. The subsidiary is expected to start functioning by the end of this financial year.
In 2007, BSE had picked up 5 per cent in CSE after its demutualisation. At the time, BSE had agreed to share its trading platform. The agreement had also proposed the setting up of a trading platform for stocks listed exclusively on CSE.
However, CSE members have been seeking exposure to the National Stock Exchange’s derivatives markets. Thus, CSE Capital Markets will help them trade in futures and options segments too. The broking arm of CSE will also start offering other financial services like distribution of mutual funds and insurance schemes.
BSE has taken CSE Capital Market’s application for a broking licence with NSE positively despite the two exchanges being keen competitors.
In a parallel development, CSE has launched depository participant services for an additional source of revenue. “CSE Capital Markets will take up a whole range of associated services which were not possible to be routed through CSE. We hope the subsidiary starts functioning before the end of the present financial year. It is expected to generate a revenue stream for the exchange.
ON the other hand, CSE has also taken up depositary participant services and expects to have an NSDL (National Securities Depositary Ltd) membership very soon,” said Thambi.
CSE has taken up several other steps to strengthen its operations, like rationalisation of workforce, settlement of demands by the union, introduction of a membership fee and strengthening internal management.
“CSE has been in a limbo for quite some time. We are now trying to ensure that it works like a company,” said Thambi.
Under the terms of agreement between CSE and BSE, several small-cap companies listed in CSE have queued up for getting listed on BSE as “permitted securities” to capitalise on the latter’s higher potential for business. However, CSE-listed companies have been finding it hard to qualify for this due to BSE’s stringent guidelines .
Since the payment crisis of 2001, when CSE went bankrupt, it has been in a limbo for quite some time.
Post-demutalisation, when several entities picked up 52 per cent in the exchange, a new board of directors was appointed for revival.
