Madhya Pradesh stock exchange faces closure

MPSE has been asked to create its own trading platform with a net worth of Rs 100 cr or face de-recognition

The century-old Madhya Pradesh Stock Exchange (MPSE) is facing de-recognition, following a notice served by the Securities and Exchange Board of India (Sebi) on Wednesday to follow new guidelines. The MPSE has been asked to create its own trading platform with a net worth of Rs 100 crore or face de-recognition.

The MPSE has urged Sebi to allow it to opt for "business consolidation" by merging itself with the Calcutta Stock Exchange (CSE).

"We have urged Sebi to give us business consolidation permission. This way, CSE may use our nearly 100-year-old infrastructure and also retain employees, brokers and investors," Santosh Muchhal, shareholder and director of MPSE, told Business Standard. The CSE would have to change its name if this takeover or merger takes place.

According to Muchhal, the MPSE has a net worth of Rs 25 crore, including reserves, 5,000-sqft floor area and a fully-furnished office. "We have nearly 250 brokers and each broker has at least four employees. This move would pose a challenge to the employees and the investors who are trading with MPSE," Muchhal said. According to him, nearly 25,000 investors are associated with the MPSE and most of them are in sub-urban areas.

The MPSE has also written a letter to Bharatiya Janata Party member of Parliament from Mumbai North East, Kirit Somaya, and urged him to intervene in the matter, by giving the logic that MPSE has 125 active trading members and 30 authorised persons under Section 13 with NSE & BSE. MPSE members are spread across 14 states. MPSE is the only regional stock exchange with a high turnover, a large geographical presence and a high number of active members.

In 2012, MPSE had launched roadshows to attract investors to the stock market. "We have spent more on what organisations like Sebi spend on investors' education and awareness programmes at a regional level," Muchhal said.