The bourse has been hit hard by the stipulation that from July 1, 2004 contract notes for all institutional trades should be online. The exchange, which survived on such institutional sales, suddenly finds itself sidelined.
Its best bet now is Indonext the low cap trading platform being put in place by BSE. According to S Raamassubramanian, former president of MSE and now a member of the exchanges board, about 5,000 securities which are low cap and listed on regional exchanges suffer from poor price discovery and liquidity. These will find a place on Indonext.
When the going got tough for MSE, it floated a subsidiary, Madras Stock Exchange Financial Services Ltd (MSE-FSL), and took membership of BSE. All MSE members became sub-brokers of MSE-FSL. Today, 28 of its 161 members operate through MSE-FSL, which has an average turnover of Rs 3 crore a day.
Small wonder, the management is upbeat. After all, with a listing income of Rs 1 crore from 1,527 companies, a few crores worth of bank deposits and space rentals, MSE is in better financial shape than other regional bourses.
MSEs membership cards once worth Rs 1 crore has few takers right now. In 56 days of April-June this year, it registered a turnover of Rs 50 crore. But since July, trade took place on only two occasions, with transactions of Rs 23 lakh.
A far cry from the over Rs-100 crore per day turnover of its heyday in the 1990s, when it was ranked as the third or fourth largest exchange.