5 regional SEs stop functioning

It may be recalled that regional stock exchanges had floated another exchange – Inter-connected Stock Exchange – in bid to stay afloat and face competition. But things have gone from bad to worse for regional exchanges. On the other hand, NSE and the BSE have set up terminals in most of the towns in the country.

It has also stated that the seven regional SEs closed down and those which have inactive members ratio of over 50 per cent include: Coimbatore Stock Exchange (66.29 per cent), Ludhiana Stock Exchange (50.17 per cent), Vadodra Stock Exchange (77.20 per cent), Cochin Stock Exchange (77.36 per cent), Uttar Pradesh Stock Exchange (57.60 per cent), Madras Stock Exchange (78.11 per cent) and Calcutta Stock Exchange (52.62 per cent).

The percentage of inactive brokers (whose annual turnover is less than Rs 1 crore) of these exchanges has risen to more than 90 per cent. Out of the remaining 14 SEs, only six account for over 97 per cent of the annual turnover of Rs 20,00,000 crore in the country. This information was given by the BSE Brokers’ Forum (BBF) to the Supreme Court in a rejoinder filed by it in a 1993-case related to the registration fee proposed to be imposed by the Securities and Exchange Board of India (Sebi).

Sebi in its submission stated to the apex court that brokers of small exchanges play a very important role as they make the capital markets accessible to small investors from different parts of the country.

BBF, while challenging the market regulator’s contention, stated that many of the SEs have virtually closed down with no active members and only six stock exchanges accounting for 97 per cent of the turnover.

Citing the reasons for closing down of the operations, BBF submitted that these exchanges were unable to bear the crushing burden of expenditure that the electronic trading platform mandated by Sebi entailed..

Sebi has contended that, among other things, it requires more funds as it also has to regulate more than 8,000 brokers spread all over the country along with other market intermediaries.