Fise upbeat on separate national trading platform

The Federation of Indian Stock Exchanges (Fise) comprising 20 regional stock exchanges (RSEs) is optimistic about a favourable decision by the Securities and Exchange Board of India (Sebi) on its plea for a separate national trading platform 'IndoNext'.

Fise chairman Ramu Sharma told Business Standard that the federation had submitted all clarifications on various issues raised by Sebi in the second week of May.

The market regulator's decision is expected in the next two to three months, he said. The Sebi chairman is also sympathetic to the initiative of Fise and BSE, he said.

It may be recalled that Bombay Stock Exchange and Fise had mooted the platform IndoNext last year to create liquidity for the shares listed on the regional stock exchanges.

The shares of companies with a paid-up capital of Rs 20 crore under B1 and B2 categories are also proposed to be moved onto this platform.

The Inter-connected Stock Exchange of India (ICSE) and Ludhiana stock exchanges also would take part in the IndoNext trading, the Fise chairman said.

Trading on the new platform will be through the BSE online trading system (BOLT) system.

BSE will look after the issues related to trading, clearing and settlement, risk management etc, while RSEs will attend to listing of companies, compliance with listing agreement, investor services and grievances besides arbitration and risk management of their members.

Sharma said that only the Calcutta Stock Exchange (CSE) had some reservations about joining the Fise initiative. CSE wanted that the platform be able to trade in all the scrips listed on the BSE.

He hoped that Fise would be able to convince CSE to join IndoNext. "Once trading on this platform takes off, we can always further expand the reach. The immediate issue before us is to start this activity at the earliest," he said.

At present, the regional stock exchanges have around 7,000 small and medium-sized brokers as their members. These exchanges together with ICSE and Ludhiana bourse accounted for around 15 per cent of the national cash market volumes.

They largely cater to retail investors and their presence in derivatives market is negligible, Sharma said.

On the other initiatives of Fise, Sharma said that a meeting of Fise members would be held in Mumbai on June 20. The members will decide on the opportunities for foray into the commodities market.

Once the members agree upon the foray, the subsidiaries of stock exchanges would have to approach Sebi for approval. The representatives of Multi Commodity Exchange of India and National Commodity and Derivatives Exchange will also attend the Fise proceedings, he said.

Sharma said that the commodities markets abroad were several times bigger than stock exchanges. India being primarily a major commodities market would witness a similar happening, he said. RSEs were expecting to partake of this huge pie to boost their revenue streams, he said.