Regional stock exchanges back in trading ring

Plan tie-ups with national exchanges, new trading platforms.

After years of dormancy, regional stock exchanges (RSE) are abuzz with activity. At least three regional exchanges are planning to launch their own trading platforms soon. This is apart from the Interconnected Stock Exchange of India (ISE), which is promoted by a clutch of regional stock exchanges.

While the Delhi Stock Exchange (DSE) plans to launch its own trading platform in the next two-three months, the Bangalore Stock Exchange hopes for a launch by the next financial year. The Madras Stock Exchange (MSE), which has signed a memorandum of understanding with the National Stock Exchange (NSE) that allows its members to trade on NSE, is also thinking of having its own trading platform.

What is expected to provide an impetus to these efforts are the Securities and Exchange Board of India (Sebi) guidelines for small and medium enterprises (SMEs) exchanges this month.

DSE, which has been defunct for the last eight years, is projecting itself as a third-level stock exchange and is inviting all regional exchanges for a strategic partnership.

To get going, DSE is banking on about 500-odd DSE-listed companies that got de-listed from it earlier as well as BSE- and NSE-listed securities under the permitted category. It is hoping to attract companies to list again by offering a competitive listing fee.

“We will not be an SME exchange but will compete with the other two national-level exchanges,” said Dushyant Chauhan, head, marketing, DSE. After demutualisation, firms such as Financial Technologies India (FTIL), Parsvnath Developers and Omaxe had picked up stakes in DSE.

The Bangalore Stock Exchange has appointed a new executive director, V Ravi Kumar, who is expected to draw up a fresh road map for revival.

“We plan to have a pan-India footprint and are deliberating on partnerships with other exchanges. In certain areas, we would like to retain independence, while in others, we will collaborate. Sebi is also coming up with guidelines for SME exchange and we will discuss all options once these are out. Post-credit crisis, regional exchanges will slowly gain more importance with smaller firms willing to get listed,” said Kumar.

Smaller exchanges with no trading platform of their own are keen to have tie-ups with national exchanges for sharing their platforms.

The Calcutta Stock Exchange (CSE) was the first regional exchange to enter into such a tie-up with BSE, which picked up a 5 per cent stake in it. Sebi’s permission to MSE sharing NSE’s platform is also seen as a step towards the revival of smaller regional exchanges.

“We are in discussions with several national exchanges for platform-sharing. Competition among exchanges will intensify once newer exchanges come in,” said Debraj Biswal, chief executive officer of the Bhubaneswar Stock Exchange.

In recent days, almost all regional exchanges have adopted the subsidiary route, under which the regional exchange floats a subsidiary or an entity formed by its own members which acquires the membership of a national exchange.

As part of its revival strategy, CSE is also planning to launch a subsidiary for members to trade in the futures and options segment of NSE.