Icse Woos Bank Brokerage Arms

The Inter Connected Stock Exchange of India (ICSE) is wooing broking arms, bank subsidiaries, financial institutions and corporate houses to trade on the exchange.

Members of regional stock exchanges will be termed as traders. ICSE has introduced the concept of dealers for the subsidiaries of the above institutions.

"We have already spoken to about 200 entities in this regard so far and many of them have written back to us seeking more details," said Joseph Massey, managing director, ICSE.

This is a significant development considering the fact that the right to trade on the exchange is open to only those brokers who are members of regional stock exchanges (RSEs).

Dealers will have to deposit a sum of Rs !0 lakh as part of capital adequacy norms in addition to an entry fee of Rs 10 lakh.

Commenting on the incentives for dealers, Massey said, "Dealers trading on the ICSE will have the benefit of lower transaction cost and a lower opportunity cost. At other exchanges, Rs 50-Rs 75 lakh remains blocked. On the ICSE, the figure is only Rs 10 lakh. Dealers can access 15 exchanges without any additional payment.

"The advantage of a wide retail network is also available which is the strong point of regional stock exchanges."

"Many banks and financial institutions hold shares of the mid-cap companies listed on the regional stock exchanges. Most of these are hardly traded because of illiquidity. Once liquidity improves at these counters, it will provide an exit route for these institutions too." he added.

Currently, there are about 4000 brokers registered on the 15 regional stock exchanges. Out of these only 2000 members are active.

The exchange has plans to introduce the modified carry forward system next year in March.

Elbee has been appointed as the official courier to transfer securities between the various exchanges as per the liability of each exchange.

ICSE has obtained all the necessary approvals except the final recognition under section 4 of the Securities and Contract Regulations Act (SCRA).

The Securities and Exchange Board of India (Sebi) has already granted an in-principle approval some time ago. Sebi will be conducting an inspection of the exchange on August 24 to check whether the risk management system is in place before granting the final approval. The bourse will be carrying a trial run on August 29 which will essentially test the software. There will be a mock trading session in the first week of September and live trading will commence on September 24.