CSE members accept demutualisation

The members of the Calcutta Stock Exchange (CSE) on Wednesday passed the resolution for demutualising one of the oldest exchange after a drama-packed extra-ordinary general meeting (EGM) during which brokers aired their complaints against the administrator.

Such was the extent of fury faced by the exchange administrator, T K Das that the meeting had to be adjourned for 30 minutes midway to pacify members.

In the beginning the questions were raised by members on the capability of T K Das as administrator to chair the meeting. They also came out openly with complaints on sums being deducted from their Base Minimum Capital.

The Securities Exchange Board of India (Sebi) had made it mandatory for all regional exchanges to be demutualised failing which they would be "de-recognised".

The scheme was envisaged by the Kania committee under Sebi, which suggested separation of trading rights and ownership rights of the members.

This was part of efforts to bring in transparency and independence in the operations of the bourses in view of the stock market scams of 2001.

De-recognition of a stock exchange by Sebi would have meant death to an exchange pulling down with itself the brokers as well as the members. While for all practical purpose CSE was style of functioning was corporatised with T K Das acting as the administrator following the payment crisis.

Out of the 21 bourses in the country, only the National Stock Exchange was initially a demutualised entity and was run by professionals.

Although Sebi has insisted on the demutualisation and corporatisation, regional bourses have favoured consolidation to stay afloat.

As per the current proposal, the Federation of Indian Stock Exchanges was trying to push through a proposal of consolidation of regional exchanges and forming Indonext, which would form a part of Bombay Stock Exchange.

Following the proposal of regional exchanges, BSE had expressed willingness to tie up with them to come up with a viable model of a consolidated Indonext Exchange.

The BSE board was expected to examine the viability of such consolidation and decide on preparing separate by-laws.

If the tie-up works out, it will be a nationwide consolidation of 20 bourses. Except the National Stock Exchange, all other bourses have expressed interest in coming under the umbrella of Indonext.