Market regulator Securities and Exchange Board of India (Sebi) today allowed the exit of Hyderabad Securities and Enterprises Limited, formerly Hyderabad Stock Exchange (HSE), as a stock exchange.
HSE has become the first stock exchange to take the exit route, as per the guidelines laid out by Sebi in a circular in May 2012.
At present, there are 25 stock exchanges across the country but barring NSE, BSE, MCX, USE and CSE, most of them are non-operational.
Sebi's framework for exit of de-recognised or non-operational stock exchanges include treatment of assets of de-recognised exchanges and a facility of dissemination board for companies listed exclusively on such exchanges, while taking care of the interest of investors.
In compliance of the Sebi circular, HSE had transferred about Rs 31 million in its ‘Investor Protection Fund’ and ‘Investor Services Fund’ and ‘1% security deposit’ amount of Rs 8.3 million available with it to the Sebi IPEF. It also paid necessary dues outstanding to Sebi including 10% of the listing fee and the annual regulatory fee. HSE also contributed an amount to Rs 10 million towards Sebi IPEF.
Further, it shifted the companies listed exclusively on it to the dissemination Board of BSE and set aside funds in order to provide for an ongoing arbitration case.
Sebi has said HSE, or its subsidiaries, can continue to function as any other corporate entity or any other normal broking entity, subject to compliance of applicable laws. Sebi, however, has said that the HSE cannot use the expression 'stock exchange' or any variant in its name or in its subsidiary’s name so as to avoid any representation of present or past affiliation with the stock exchange.
Sebi said it will intimate the Income Tax Authorities and the state government of Andhra about the exit of HSE, for appropriate action at their end.
HSE had to failed to comply with the Scheme for Corporatisation and Demutualization, following the central government had issued a formal notification in September 2007 on withdrawal of its recognition.
