CHENNAI, May 10: An inter-connected stock market system (ICMS) is likely to be in place by December this year. The Securities and Exchange Board of India (SEBI) has already given ``in principle'' approval to connect 12 regional stock exchanges across the country, according to M R Mayya, former executive director of Mumbai Stock Exchange.

Participating in a symposium on the future of regional stock exchanges organised by the Southern Institute of Capital Markets on Friday, he said a national stock market system had been conceived on the United States model in which transactions on a large scale would have the necessary depth and the benefits would be delivered to the investors cost effectively.

Joseph Massey, managing director of Indian Stock Exchanges Services Corporation, Mumbai, said a time to construct such a system driven trading regime with national reach had come because in the last five years all most all the market systems had been institutionalised. There is a depository now even as the brokers have had their membership corporatised with capital adequacy of 3 per cent, the norm prescribed by SEBI.

However, he regretted though more than Rs 500 crore had been invested in the last few years in the stock exchanges on hardware and software to facilitate on-line trading, brokers did not have enough business in a small fragmented market which had 23 different trading systems.

The new system integration, he said, would provide a national alternative to the investors whose reach, hitherto, was restricted to only the local alternative at the hands of the neighbourhood broker. Since the investors would have a single point of contact where the checks and balances are systematised, transactional costs would be much lower, he observed. The technical solutions for integration had already been evaluated, and it would be possible in a few months time for 6 more exchanges also to get interconnected with the national market, he hoped.

In the inter-connected market system, the trading cycle will be completed in 5 days while settlement would be carried out in a span of 7 days. The central clearing office will be at Mumbai.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.