CSE brokers for following NSE model of demutualisation

Jaidev Majumdar

Kolkata, Aug 8: The Calcutta Stock Exchange (CSE) would do well to follow the NSE model so far as demutualisation of regional stock exchanges is concerned, according to some members and brokers of CSE.

CSE’s former president Kamal Parekh who resigned recently following the payment crisis that rocked the country’s third largest bourse said that the NSE model is worth emulating.

“Look at the way the NSE has grown. Whether the CSE will grow the same way [after demutualisation] is something that is difficult to predict,” he said.

The NSE model does not allow any broker to be a member on its board. The 11-member CSE board is currently engaged in firming up on the demutualisation plan following finance minister Yashwant Sinha’s announcement in the parliament recently that all regional stock exchanges should be demutualised. “The decision to demutualise the stock exchanges is a policy matter and choosing models is best left to the authorities. Which model will suit the CSE I cannot comment. Only time can testify on that,” Mr Parekh said.

The CSE board is currently weighing the option of choosing between two role models- either NSE or London / New York Stock Exchanges. Unlike NSE, both LSE and NYSE allow broker directors on board but their trading rights are restricted.

The CSE board met here late Tuesday and talked extensively on demutualisation of CSE. “We will soon decide on which model we are going to choose. We will also take this matter up with the finance ministry and seek their guidance,” said Sebi executive director (legal) DN Raval, who is also in the CSE board after the payment crisis hit the stock exchange adversely.

Meanwhile, CSE’s annual general meeting for 2000-01 has hit a roadblock as the its annual report has not been completed as yet.
The CSE board will soon request the Registrar of Companies (RoC) seeking an extension of three months to finalise its accounts for the fiscal 2000-01.

“We hope the RoC will grant us this additional time as we are trying to avoid a constitutional crisis of the stock exchange. Meanwhile we will keep talking to the auditors and see how the preparation of the balance sheet can be expedited,” Ms Raval said.