New Delhi, July 6: To give a fillip to its dwindling business, Inter-Connected Stock Exchange (ISE) has suggested that members of regional stock exchanges (RSEs) be allowed to shift their capital deposits from the RSEs to the ISE. It has also sought a consolidation of the capital market infrastructure, whereby exchanges not having a national presence should compulsorily be asked to join the ISE. These are some of the issue which will be taken up at the ISE board meeting scheduled for July 9. The recommendations of the board will be forwarded to the Securities and Exchange Board of India.These suggestions form part of a paper prepared by Ashok Sardana, director, ISE, and has already been forwarded to M R Mayya, chairman, ISE. The paper has says that a modified carry-forward system should be allowed in order to generate more interest in the exchange. This, the paper says, will also lead to higher volumes on the ISE.
The provision to allow the RSE members to shift their capital base to ISE will providethese members an opportunity to trade on a national system in a cost-effective manner. Participation of the RSE members will also help improve trading volumes in small regional towns. At present, an RSE member's capital lies idle in the RSE as there is hardly any business there.
The paper says as the RSEs individually lack the necessary depth to operate and compete effectively with NSE and BSE, it will be in the best interest of these RSE members to form a part of ISE. This would result in ISE emerging as a national market system consolidating all idle resources and capital market infrastructure. It would also provide ISE the impetus to compete with bigger national exchanges.
Over the last few years, the emergence of the National Stock Exchange has virtually left the RSEs with negligible business and the market place at some of these RSEs have ceased to perform their function of price discovery and liquidity. The market share of these RSEs has been steadily declining since live trading started on theInter-Connected Stock Exchange in February. There has been a clear shift in business from the RSEs to the National Stock Exchange.
ISE, in an effort to push trading volumes, has already applied to Sebi for permission to trade with Mumbai and other centres to provide trading facilities to members of participating stock exchanges. Currently, only 60 traders are participating in ISE out of the 197 registered with Sebi.
The thrust of ISE's paper is to consolidate and strengthen the RSEs with specific focus on retail investors and small capital companies listed on the regional stock exchanges. ISE is also planning to inter-link the rural and semi-rural centres in the country to provide a national platform for rural investors.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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