UPSE brokers feel left-out in Sebi Core Committee

Demand Sebi head office be shifted to New Delhi.

Uttar Pradesh Stock Exchange Brokers Association (Upseba) has alleged that due representation was not given to the regional bourse in the Securities and Exchange Board of India (Sebi) Core Committee on Review of Eligibility Norms.

Formed in 2008, the committee comprising 18 representatives of stock exchanges, depositories, broking industries, legal experts etc was divided in four sub-groups.

“These sub-groups, which had no representation from the 24 regional bourse, have submitted their reports after an inordinate gap of almost two years,” Kanpur-based Upseba president Sushil Kumar Kanodia told Business Standard.

Kanodia is also ex-director of UP Stock Exchange. The brokers have also demanded the Sebi head office be shifted to Delhi for better control by the Union finance ministry.

He alleged the big brokers affiliated to the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) did not want the revival of regional exchanges, so that their ‘monopoly’ could persist.

Besides, retail participation in the stock market could be boosted if regional bourse are revived and strengthened.

“The sub-groups comprised the directors of big broking houses and high officials of Mumbai-based exchanges. There had been no representation of middle and lower class of people or broking house from other states,” he claimed.

Kanodia claimed 40 per cent of the total volume of securities transactions were from Maharashtra and Gujarat.

“While UP accounts for below 3 per cent of the total volume, all the states other than Maharashtra and Gujarat have about 60 per cent participation and they cannot be ignored,” he said.

The association had already written a letter to the prime minister, finance minister and the Sebi chief on the issue.

“We will again write a letter attracting their attention to this discrepancy and not allow the recommendations of these sub-committees be implemented. If needed, we will approach the judiciary,” he said.

Upseba has urged Sebi to reject some recommendations of the sub-committees, including regional stock exchanges should have minimum net worth of Rs 50 lakh from Rs 10 lakh at present, only body corporate be allowed to operate in the market, and sub-brokers be discontinued.

“We demand that Sebi scrap the reports of the committee and initiate a CBI enquiry in these affairs, including fixing accountability of inordinate period of 2 years taken by it so that small brokers are protected. A new committee be formed giving due representation to all the regions,” he maintained.

UPSE has about 200 members and most have BSE and NSE terminals for trading.

Sharekhan regional head Mradul Verma said the NSE and BSE had become so technologically advanced that it would a tall order for the regional bourse to give any meaningful competition to them.

“Besides, the brokers affiliated to them already have big clientele and have become financially robust. It would be very difficult for the small brokers to match the kind of services they provide,” he observed.