Cse Taps Cash-Rich Members For Sgf Funds

The Calcutta Stock Exchange (CSE), in a major confidence rebuilding push, is asking cash-rich members to contribute funds to replenish the settlement guarantee fund (SGF) which was exhausted during the payment crisis in March last year.

The SGF stands guarantee in case a member fails to honour his payment commitment.

"Asking big brokers to contribute fund is different from the members' previous attempt when they chipped in with money after the payment crisis. This time, the CSE is trying to build up the SGF, while the previous attempt was aimed at meeting the shortfall," said top CSE sources.

They said the response from brokers thus far was "good." It would further gain momentum as soon as big local brokers begin trading with CSE, they said.

To boost trading on the bourse, the CSE has also begun talks with brokers who are trading on the National Stock Exchange, to bring them back to C-Star, the on-line share trading system of the local bourse.

Participation of brokers in a bigger extent will not only boost business, but also help replenish the SGF as half of the turnover fees are transferred to the fund.

CSE is also exploring other possibilities, which include seeking financial assistance from the West Bengal government. Although nothing has been finalised on how the government assistance could be sought, the exchange might ask for relaxation on developing the land allotted by the government on the Eastern Metropolitan Bypass. This was given to CSE on a long-term lease for development of a futuristic exchange building and a financial centre.

The government has agreed to give a hearing to some leading CSE members. These members had requested the government to help save the local exchange when they met finance minister Asim Dasgupta on the sidelines of a financial and investment expo in the city on Friday. In response, Dasgupta asked the CSE members to come over to Writers' Buildings-- the state headquarters -- to discuss the issue.

The CSE administration, currently being monitored by an acting executive director after the former executive director was asked to go by the Securities & Exchange Board of India, is determined to regain the confidence of local brokers.

The exchange is not in favour of merging itself with other bourse. "The identity of the country's third-largest exchange should be maintained," said a top source.