BSE mulls platform for small companies

The Stock Exchange, Mumbai (BSE) proposes to introduce a trading platform exclusively for small-cap companies with a paid-up capital of up t...

The Stock Exchange, Mumbai (BSE) proposes to introduce a trading platform exclusively for small-cap companies with a paid-up capital of up to Rs 20 crore and listed on BSE as well as regional stock exchanges (RSEs).

BSE, in the meantime, has shelved its plan to have a separate merged entity of regional bourses under a new exchange, called Indonext, as it is not financially viable. However, the current move by Asia’s oldest SE is aimed at imparting liquidity in illiquid stocks. This is expected to result in providing exit route to a number of small investors.

Bull run continues,
Sensex up 54 pts

MUMBAI: THE buying frenzy on Indian stock markets is continuing. After Tuesday’s 148-point rise in Sensex, operators and funds took the market to new peaks on Wednesday. Sensex crossed the 4,200 level for the first time after March 1, 2001. Recording its second straight gain, Sensex settled 53.27 points or 1.28 per cent higher at 4,205.56. The National Stock Exchange S&P CNX Nifty Index gained 22.10 points to close at 1,340.30.

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While buying support was seen almost across the board, stocks in the banking and tech sectors were in the limelight. Bank stocks like Andhra Bank (up 15.02% to Rs 44.80) and Bank of India (up 13.96% to Rs 54.30) ended firm on sustained buying support.

Canara Bank (up 9.08% to Rs 130.35) also ruled firm — having risen from a low of Rs 121.10 — on sustained buying support. ‘‘Though the sentiment is upbeat, profit-booking is not ruled out,’’ said a broker. SBI rose from Rs 438.70 to its lifetime high of Rs 457.45 in the mid-afternoon trades before settling at Rs 454.95, up 4.08% over previous close. (ENS)

As per the latest move, BSE plans to introduce a new group, to be called as ‘S’ group, as a separate segment where the small-cap companies will be housed and members of BSE as well as RSEs, by retaining their identity as the members of their respective exchanges, would be able to participate in trading. The operational details are currently being worked out.

BSE’s business development director S. T. Gerela said, “As of now, we have not envisaged any financial merger of participating regional exchanges with BSE. However, we will be providing our BSE On Line Trading (BOLT) platform to RSEs for exclusive trading in small-cap companies, called ‘S’ group.”

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Trading in this group would enable the promoters of the small-cap companies listed on RSEs to mobilise fresh capital from the public given the liquidity provided to their scrips by the BSE trading platform. At present, the promoters of such small-cap companies are not able to raise fresh funds as there is no trading in their stocks on the RSEs.

Companies with a paid-up capital of up to Rs 20 crore, and listed on BSE and various RSEs, would be included in the ‘S’ group. At present, such companies, listed on BSE, number around 2,300, recording Rs 100-crore daily average turnover. This would operate as a separate segment on the BSE and the member-brokers of BSE as well as those of the participating exchanges would be able to trade in these stocks. BSE will not only provide trading platform for these stocks but will look after the clearing, settlement and risk-management aspects of the trades executed in this segment.

BSE expects stocks of around additional 1,700 companies (total 4,000 companies) to be traded in the group with an average daily turnover of around Rs 300 crore in a year’s time. However, the exchange plans to continue to indicate the various stocks traded in different groups, viz. A, B1, B2 and Z, as this serves as an important function of guiding investors in making their decisions.

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