ISE plans expansion to counter volume slump

Nitin Mathur

New Delhi, Aug 26: In a bid to fight the slump in volumes, the Inter-connected Stock Exchange (ISE) is targeting to expand into centres not yet covered by the National Stock Exchange and the Bombay Stock Exchange NSE and BSE.

The exchange has also increased its net worth by Rs 2 crore to Rs 4.5 crore to meet the capital adequacy requirement for trading in the derivative segment.

ISE chairman MR Mayya said that the Jaipur Stock Exchange may soon join the ISE. According to Mr Mayya, ‘‘Our doors are open and the Jaipur exchange only needs to pay us an amount of Rs 40 lakh to come into our folds.’’

Speaking about the recent developments at the exchange, Mr Mayya said, ‘‘We have been increasing our reach by expanding to newer centres and increasing the number of trading terminals. In fact, while on other exchanges operators are surrendering their terminals, we have been able to increase its number. Besides, we have increased the number of centres to 40 from 30 in the first week of March 2001. Two of our centres, one each in Varanasi and Noida will be operational in another 15 days.’’

Mr Mayya added that the volumes on ISE have dropped to 60 per cent since February while the volumes on other exchanges have been reduced to 10-20 per cent over the same period.

Actually, the decrease in the number of trades is only 37 per cent, from 30000 trades in February 2001 to 19000 currently and the rest of the depreciation in volumes is due to the decline in the value of securities.

According to ISE managing director V Shankar, ‘‘The number of operators on our exchange has also gone up to 175 and a few more would be joining us from Guwahati, Kanpur, Magadh and Coimbatore centres. Besides, we also plan to start derivative trading by the end of October 2001.’’

Asked about the reason for the good response, Mr Mayya said that it was due to the model on which ISE operates where their members are sub-brokers of ISE.

Elaborating on it he said, ‘‘Sometime the NSE brokers do proprietary trading and may default on their commitments or incur heavy losses. This affects the brokers operating under them. Since we do not have any proprietary trading, our model is fool-proof and trustworthy.’’

Mr Shankar added that ISE being a depository participant leads to operational convenience for sub-brokers. ‘‘Internalising the depository makes delivery of shares faster and easier. This makes it convenient for the ISE operators to square off the positions on the same day’’, Mr Shankar added.