More regional companies exit national bourses

Stocks of companies under 'permitted to trade' category to be discontinued

Another five regional exchange companies have ceased to trade on the national platform, following the shutting down of their home bourses.

The BSE said the same would be effective from May 22.  The National Stock Exchange (NSE) had announced a similar measure in January for 56 companies.

This time, the companies include Schneider Electric President Systems, The Jeypore Sugar Company, Polyspin Exports, Ortin Laboratories and Ranklin Solutions. Companies whose trading had been stopped earlier include Jumbo Bag Limited, Panasonic Appliances India Company and the United Nilgiri Tea Estates Company.

“Trading members are hereby informed that the trading in the equity shares of the following companies admitted in ‘permitted to trade’ category will be discontinued w.e.f. Friday May 22, 2015, as regional stock exchanges of these companies are derecognised,” said the BSE’s May 18 notification.  

The ‘permitted to trade’ category applies to companies which are listed on another exchange, but whose shares can be bought or sold on the national bourse. For example, Panasonic was listed on the Madras Stock Exchange. This meant that the company paid listing fees and made disclosures on the Madras bourse. However, its shares could be traded on the NSE because it was made a part of the ‘permitted to trade’ category.

At least eight companies had a market capitalisation of over Rs 200 crore among the companies, which were removed from the ‘permitted to trade’ category on the NSE. Some had been listed separately on the NSE so that they could continue trading, while others were in the process of doing so, an exchange spokesperson had then told Business Standard. However, these were in a minority.

The total value of the five BSE companies was Rs 137.5 crore, according to the latest available exchange data.

Virendra Jain, founder of Sebi-registered investor association Midas Touch, said the wider problem of what to do with regional exchanges and companies listed on them needs to be addressed.

“The exchanges may be right to do so under certain rules and regulations, but that doesn’t solve the problem,” he said.

Securities can be traded so long as they are “actively traded at other stock exchanges…provided they meet the relevant norms”, according to the exchange website.

The Securities and Exchange Board of India (Sebi) had asked stock exchanges to meet minimum networth criteria of Rs 100 crore and annual turnover of Rs 1,000 crore to continue operations. Many regional stock exchanges have since ceased operations.

Criteria for regional exchange-listed companies to migrate to the national bourses have been eased. This has had limited impact because companies prefer to avoid compliance issues associated with listing on a national bourse, say experts.