SKSE plans merger with other regional exchanges

Rajkot-based Saurashtra Kutch Stock Exchange (SKSE) is planning to merge the exchange and its subsidiary SKSE Securities Limited (SKSESL) with other regional stock exchanges, including Ahmedabad Stock Exchange (ASE) and Vadodara Stock Exchange (VSE). The board of SKSE has already approved the proposal and merger talks with regional exchanges will initiate from the next week.

"We have decided to merge SKSE and SKSESL with other regional exchanges. For that we had talked with SEBI officials and they had approved to merger. Now, we are planning to talk with Ahmedabad Stock Exchange and Vadodara Stock Exchange. We will also send proposal to Inter-Connected Stock Exchanges (ICSE)," said Ashok Koyani, chief executive officer, SKSESL.

"After losing a case in the Supreme Court, we had no batter choice. This step will secure future of our members and investors," he added.

It may be noted that SEBI had derecognised SKSE in July 2007, on the grounds of vacuum at the top management level, inadequate infrastructure, broker's interference in the day-to-day operations of the exchange and the overall lack of interest of members to revive trading on the regional bourse. SKSE had challenged the SEBI decision in Securities Appellate Tribunal (SAT) but tribunal gave a decision against SKSE. Thereafter, SKSE officials went to Supreme Court, which ruled against SKSE in May 2012.

At present, SKSESL is working as broking company with a daily turnover of around Rs 35 crore. After merger with any other exchange it will continue to work as broking house under new name. SKSE has 415 members and out of these 347 are shareholders. It has 34,000 de-mat accounts in SKSESL.

When contacted Hemantsingh Jhala, chairman and shareholder director, Ahmedabad Stock Exchange Limited (ASEL) said, "All the regional exchanges are trying to survive and we are also in process to increase our networth to be recognized. At this time, if SKSE would propose us to merge, we will welcome them," said Hemantsingh Jhala, chairman and shareholder director, Ahmedabad Stock Exchange Limited (ASEL). A circular for 'Exit Policy for De-recognized or Non-operational Stock Exchanges' was issued by Securities and Exchange Board of India (Sebi), almost forces the stock exchanges to shutdown, get de-recognised and make an exit. The regulator has offered regional stock exchanges the option of making a voluntary exit or achieve an annual turnover of Rs 1,000 crore (about Rs 4 crore every day). This is tough considering weak performance of the regional stock exchanges.

If a stock exchange is not able to achieve the prescribed turnover on a continuous basis, Sebi shall proceed with compulsory de-recognition and exit from such stock exchanges. Additionally, an earlier circular of the regulator had mentioned that a bourse should have networth of Rs 100 crore to operate. Ahmedabad Stock Exchange has a networth of Rs 56 crore while that of Vadodara Stock Exchange is around Rs 45 crore. SKSE has a networth of about Rs 40-45 crore.