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The National Stock Exchange (NSE) has suspended trading in companies listed on the Madras Stock Exchange (MSE) and Madhya Pradesh Stock Exchange (MPSE), following closure of these bourses. These companies—eight of them with market value of more than Rs 200 crore—were traded on the national bourse in the ‘permitted to trade’ segment.
MPSE and MSE had entered into an alliance with the NSE, which gave companies listed on their exchanges permission to trade on the NSE as well. These companies did not have a separate listing agreement with the NSE.
“As the MSE and MPSE are no longer recognised as stock exchanges, it was decided that trading in these securities should be halted. But companies can apply for listing on the exchange,” said an NSE spokesperson.
“Of those companies, five have already been listed on the exchange (NSE) and are available for trade, while five others are in various levels of discussions (for listing),” the spokesperson added.
An NSE circular issued last month notes the names of 56 such companies, which were traded on the NSE. Of these, trading in three of the companies had resumed, a manual check on the NSE website revealed.
Some of the more prominent names include Coromandel Engineering of the Murugappa Group, Southern Ispat and Energy, and VTX industries, among others. Forty-nine of the companies mentioned in the list currently trade on the BSE.
Some of the companies mentioned in the list that Business Standard spoke to expressed their interest in being listed on the NSE. Others said they were content being listed on only one exchange.
The listing requirements are less stringent for these companies but even then, their migration to the main exchange remains a challenge, exchange officials said.
“The financial health of some of these companies makes it difficult for them to get promoted to the main board. The liquidity in these stocks is another problem which disqualifies them from moving to the main board,” said a BSE official, adding the exchange had requests from companies from regional stock exchanges which had shut down.
MSE and MPSE were derecognised as exchanges after failing to meet minimum net worth and turnover criteria as set by the Securities and Exchange Board of India (Sebi) in 2012.
In 2012, Sebi had asked all exchanges to ensure a minimum annual trading turnover of Rs 1,000 crore along with a minimum net worth of Rs 100 crore and gave them a period of two years to comply with the norms or face de-recognition. MSE and MPSE shut down their operations by May 2014, the deadline for meeting the norms.
Companies exclusively listed on such exchanges were moved to the dissemination board of either the BSE or NSE, where trading in the scrips was to be conducted through the exchange-designated electronic filing system, directly between seller and buyer. Exchanges have no surveillance oversight on bid and sell offers on these trades and such trades are settled outside the exchange clearing corporations.
