SKSE Securities gets interim stay

The SKSE Securities Ltd, a subsidiary of the Saurashtra Kutch Stock Exchange (SKSE), received a short term relief on Monday as the Securities Appellate Tribunal gave an interim stay to SKSE Securities, allowing it to carry out its day-to-day business activities till Saturday.

A highly-placed source in the SKSE told Business Standard that on Monday morning the exchange approached the Securities Appellate Tribunal and got an interim stay from the tribunal.

The tribunal has issued an interim stay order till Saturday, allowing the subsidiary to carry on its daily business.

The tribunal has fixed the hearing for Saturday that will take place in the presence of representative from the BSE, NSE and SEBI. If the tribunal further issues a stay order then the subsidiary will continue its function and in case a further stay order is not granted, then the subsidiary has to discontinue its activities.

There are 415 broker members at the exchange, of which only 70 are active members. However, at the hearing of the tribunal, the representatives of the exchange are expected to put forward their argument to take into consideration the interests of the brokers and investors.

Presently, the SKSE Securities trades only in cash segment of the BSE and NSE, with a daily turnover of Rs 35 crore. The SKSE holds 99 per cent in SKSE Securities Ltd and the remaining 1 per cent is held by brokers.

The source further said that five top officials of the stock exchange have rushed to Mumbai to meet the officials of SEBI. Chairman of SKSE Y C Unadkat, public representative director Alok Kumar Chakrawal, officiating executive director Rajesh Gandhi and two broker directors V P Vaishnav and M P Doshi are camping in the financial capital to defuse the crisis.

On Friday, the SEBI had withdrawn the recognition of Saurashtra Kutch Stock Exchange. An order passed by the market regulator pointing out discrepancies led to the SEBI taking the extreme step of de-recognising the SKSE.

The SEBI pointed out that the exchange had a vacuum at the top management level, inadequate infrastructure, broker's interference in the day-to-day operations of the exchange and the overall lack of interest of members to revive trading on the regional bourse.

The regulator also said that in the past it received frequent complaints on the mal-administration and mismanagement by the council of the exchange from various quarters.

The report of the SEBI on the mal-administration and mismanagement has also been confirmed by highly-placed sources with the exchange.

The sources informed that following an inspection by SEBI, of the exchange during June 2006, a report was sent to the exchange by SEBI during September 2006 pointing out the irregularities at the exchange.

But the management did not bother to take necessary changes which ultimately resulted in the showcause notice to the exchange in February 2007.

The exchange management which did not learn its lessons even from all this finally had to face SEBI's de-recognition order.