Guestcolumn

ISE has provided for a separate highly-automated trading system with clearing andsettlement facilities directly open to all the registered traders of the participating exchanges on an equal footing regardless of the location of the participating exchange and of the status of the exchange in terms of turnover, financial strength, etc. It is thus converting small, fragmented and illiquid markets into a large, efficient and liquid national-level market. Being the latest in the field, ISE has state-of-the-art computer and communication systems. Since it uses the infrastructure of the member bourses, the total project cost of ISE is just Rs 17.20 crore.

ISE has a totally system-driven risk management and surveillance scheme with properly prescribed intra-day trading limits, exposure limits and mark-to-market trading limits with warnings at 60, 75 and 90 per cent of the limits followed by single-sided suspension of the trader with the facility to square off the outstanding positions. Besides, there are daily circuit filters and collection of various types of margins like gross exposuremargins, net exposure margins, mark-to-market loss margins, additional volatility margins, concentration margins, and scrip/trader specific ad hoc margins by direct debits to the trader8217;s bank account. While all these safeguards do ensure risk-free trading, ISE has a Settlement Guarantee Fund and a comprehensive insurance cover covering, inter alia, fake, forged and stolen shares as a measure of further safety. While being a centralised national level market for trading, ISE has decentralised the operations as the participating regional stock exchanges continued to be the centres for trading, clearing and settlement. Grievances are addressed right at these centres.

With electronic transfer of funds facility, ISE is able to effect lay-out of funds and securities on the eighth day after the last trading day of the weekly trading cycle. An investor dealing with a trader of ISE has to pay single brokerage only to put his deal on the national segment of ISE. It proposes to launch several market developmentmeasures such as introduction of modified carry forward system, registration of subsidiaries of commercial banks, FIs and large corporate houses as dealers to trade directly on ISE etc.ISE has so far successfully completed 18 settlements with movement of money and securities with over 90 per cent in demat mode among the various traders at the 11 participating stock exchanges taking place without any hitch whatsoever. ISE will add to market synergy enhancing liquidity in listed securities, particularly the illiquid ones, rendering services to the investors spread all over the country at their doorsteps.

The author is Chairman, Inter-Connected Stock Exchange of India Limited