The Inter-Connected Stock Exchange (ISE), comprising eight regional stock exchanges (RSE), on Thursday decided to seek a hearing with the Securities and Exchange Board of India (Sebi) to present its concerns on the key recommendations of the Bimal Jalan committee.
ISE, formed in 1998 by regional stock exchanges, had planned to launch live trading in equity currently traded on NSE, BSE and RSEs under the permitted to trade category from February 2011 subject to regulatory approval. However, the recommendations of Jalan committee have created uncertainty over the future of RSEs, many of whom were looking to rope in strategic partners in the coming days for their expansion plans.
The Jalan committee, which was set up to study and review the ownership structure of the market infrastructure institutions (MII), had suggested capping profits of stock exchanges besides recommending against their listing. The committee suggestions have come as a blow to RSEs which had roped in additional investors as part of the demutualisation process on the promise of listing their shares. ?There was no mention of cap on profitability and non-listing of shares when these stock exchanges were asked to broad base their share holders as part of the demutualisation process three years back. Accepting these recommendations will be a retrograde step,? ISE chairman Rajendran Nair said. ?We will loose our credibility among our own participating members,? he added.
Earlier a senior executive of ISE had told FE that the Jalan committee recommendations has become a major hindrance for their future fund raising programmes. ISE was planning to raise additional funds by way of either preferential issue, rights issue or fresh issue of equity shares. The exchange has a paid up equity capital of Rs 60 crore and is required to shore it up to Rs 100 crore to be eligible for introducing products in the futures and options segment. Similar is the case with other regional exchanges. ?We were evaluating the options to bring in more investors for our future growth strategies. Now it will be difficult to get strategic partners,? said Santosh Muchhal, director, Madhya Pradesh Stock Exchange (MPSE).