Finmin discusses ways to push cash segment

The finance ministry on Thursday met the market regulator and representatives from the stock exchanges to discuss ways to boost the cash segment that has seen a dip in volumes. The meeting also discussed measures to increase participation of retail investors in the market.

The exchanges said the levy of Securities Transactions Tax (STT) was a major concern as investors were moving to the commodity markets where no such tax was levied. They sought lowering of the compliance procedure and costs on brokers to facilitate greater retail participation in the market.

The meeting, attended by top executives of the BSE, NSE, MCX-SX and USE along with representatives from the Securities and Exchange Board of India (Sebi), deliberated upon ways to develop and broad base the market. Bourses suggested measures like lowering of costs and simplification of procedures.

“We have formed a sub-committee of this group that will meet once in two months. It will try to resolve issues through a consensus,” said Thomas Mathew, joint secretary, capital markets. He said a separate platform for small and medium enterprises was likely to be launched by stock exchanges in the current financial year.

Volatility in the stock markets following the US downgrade and debt crisis in the Euro zone, growth of various market segments, declining turnover and listing of new products such as third-party warrants and foreign indices on the bourses were also discussed.

“We looked at how to deepen the market to extend product range... We looked at how to re-energise cash segment and increase retail participation,” said BSE CEO Madhu Kannan.

The executives said the cash segment had seen pressure in the last three years whereas ‘future and options’ had taken off, and therefore, there was a need to give a push to the cash segment.