DSE Members Okay Plan For Foray Into Retail Debt Segment

New Delhi, June 11: | Updated: Jun 12 2002, 05:30am hrs
The Delhi Stock Exchange (DSE) members have endorsed a proposal of their board to allow the exchange foray into the retail debt segment and borrowing and lending of securities and funds. At an informal meeting to decide on the future course of action of the exchange, the members also asked for incentives to trade on the beleaguered exchange to improve volumes.

The meeting, which went on till late evening on Monday, gains significance as it was called to gauge the members willingness to improve the state of affairs at the DSE as the trading volumes on the exchange virtually been reduced to a naught.

The broker members also suggested that the exchange should ask the Securities Exchange Board of India (Sebi) to allow companies with paid-up capital below Rs 20 crore trade only on the regional stock exchanges. DSE president Vijay Bhushan said: This was one of the suggestions made by the Confederation of Indian Industry (CII) and the Federation of Indian Chambers of Commerce and Industry (Ficci) to the market regulator and I am told that The Stock Exchange, Mumbai is also not averse to it.

According to Mr Bhushan: We wanted to take the opinion of our broker members as their cooperation and interest is important in whatever we do. And now that we have received a go-ahead from them, we will be holding a board meeting shortly to start work on these proposals.

He added that the members were willing to work for increasing trading volumes at the DSE but demanded certain incentives. The suggestions to ensure higher volumes included waiving of cabin rent to make more trading terminals functional and implementation of a scheme of incentive to cover connectivity costs for VSATs, Mr Bhushan said. These incentives would be offered only if the members achieve a minimum trading volume, he added.

Currently only 18 trader work stations (TWS) are functional at the exchange as compared to about 900 earlier.

Mr Bhushan said that the plan to enter retail debt segment was mainly driven by the fact that participation of retail investors in this segment is currently very low and the government seems to be keen to see the share go up. Members suggested that the DSE may also rope in certain other regional exchanges in this project.

Mr Bhushan added that the members favoured the exchange to provide the service of borrowing and lending of securities and funds which is currently being done by SHCIL. The stock exchange mechanism will ensure trade guarantee to borrowers and lenders that when the transaction is reversed, they will get back their shares or funds. Besides, it will also reduce costs of borrowing as currently the investors have to pay 125 per cent margins and then about 18 per cent interest, Mr Bhushan said.