At a time when policymakers are trying hard to increase the competition between stock exchanges, the Securities and Exchange Board of India (Sebi) is doing its bit to cleanse the arena of bourses that have been lying dormant for many years.
According to persons privy to the development, Sebi, which recently approved the exit plan of Hyderabad Stock Exchange, is working on the exit proposals of three more regional stock exchanges (RSEs) ? Cochin Stock Exchange, Coimbatore Stock Exchange and Saurashtra Kutch Stock Exchange.
?There are three proposals on the table and the due process of exit schemes would be completed soon,? said an official on conditions of anonymity. ?The thought process is to first look at exchanges whose registration or recognition has already lapsed as they are not serving the real purpose of a stock exchange,? he said.
The recognition of Cochin Stock Exchange expired in November 2012, while Sebi withdrew the recognition of Saurashtra Kutch Stock Exchange in July 2007. Further, Coimbatore Stock Exchange did not file for renewal of recognition, which expired in September 2006, due to a pending litigation before the Madras High Court. Officials of the three RSEs could not be contacted despite repeated attempts.
The Sebi move assumes significance as there are a total of 25 stock exchanges in the country, but trading activity is limited only to a few. For years, the regulator, along with market participants, has deliberated on the manner in which such dormant exchanges can be provided an exit route without impacting the shareholders of companies listed on these exchanges.
Finally, in May last year, Sebi issued the guidelines for exit of stock exchanges. It contained details related to conditions for exit of de-recognised/non-operational stock exchanges, including treatment of assets of de-recognised exchanges and a facility of dissemination board for companies listed exclusively on such exchanges, while taking care of the interest of investors.
Last week, while speaking at the launch ceremony of MCX Stock Exchange (MCX-SX), Sebi chairman UK Sinha also expressed concern over the large number of dormant stock exchanges in the country and said that the issue needs to be addressed urgently.
?When we look at 21 stock exchanges today, we find that there are 17 out of those 21 who did not have any trading for the last five years. There are 13 exchanges where there has been no trading for 10 years. Obviously, this situation cannot be allowed to continue,? he said.