Come April and Indore-based Madhya Pradesh Stock Exchange will come alive with trading facilities. After getting a nod from the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE), the only stock exchange in the state will be first in India to provide independent trading platform for the bourses.
The Securities and Exchange Board of India (Sebi) had earlier advised all regional stock exchanges to make an alliance with NSE and BSE under Section 13 of the Security Contract Regulation Act, 1956, which permits stock exchange members to do contracts and options in securities in state or regional stock exchanges.
Established in 1919 in Indore, Madhya Pradesh Stock Exchange (MPSE) has 315 listed companies (non-compliant) and 203 members but the trading was in a hibernation mode.
“We are the first to enter into agreement with both the stock exchanges recently, and first in India to get Sebi’s approval for both the stock exchanges, the trading will begin by April this year,” said Ashish Goyal, a shareholder in MPSE, and added, “After the tie-up with NSE and BSE, scrip listed at MPSE will be traded in “permitted category”.
As of now trading at regional stock exchanges happens through their subsidiaries. “We have our subsidiary MPSE Securities Limited, which was formed after Sebi guidelines were issued in 2008. Strategic investors hold 51 per cent in it and the rest is with the members, the company members however cannot issue contract notes in their names, like those issued by BSE and NSE members,” Goyal said. After this tie-up the members will have a trading platform and be able to issue contract notes in their names and can even appoint sub-brokers. Reportedly, only five regional stock exchanges have been given approval by Sebi to form alliance with NSE. As an MPSE member in the state if someone wants to trade in NSE, he will have to arrange a fund of Rs 2.71 crore and Rs 33 lakh for BSE as trading fee. “After this tie-up they will be able to trade only at Rs 7 lakh, of which Rs 5 lakh will be refundable,” said a source in MPSE.
