The battle between the securities market regulator and regional stock exchanges (RSEs) seems to be gaining momentum as shareholders of Ahmedabad Stock Exchange (ASE) have decided to drag Securities and Exchange Board of India (Sebi) to court against the stringent norms for RSEs that is feared to lead to the complete closure of the RSEs.
Five shareholders and five members of the Gujarat-based stock exchange are likely to challenge Sebi's order, prescribing RSEs to maintain Rs 100-crore net worth, Rs 1000-crore trading turnover and five per cent cap on shareholding.
"There are five shareholders and five members of ASE and an NGO working for investors and brokers will file a case against SEBI's order in the Gujarat High Court over the next one week," said a member of ASE, not willing to disclose his identity.
Earlier this month, promoters and members of the Uttar Pradesh Stock Exchange (UPSE) had moved Allahabad High Court against SEBI for prescribing stringent norms for RSEs. The Court has admitted a petition filed by the UP Brokers Forum.
According to insiders, members of most of the 16 RSEs are in the process to take a legal recourse against Sebi's order.
"The order may lead to closure of the RSEs, if the new norms are not met. This is a threat on the existence of RSEs. After UP, soon there will be many others who will file case against Sebi's order," said a shareholder of ASE.
It may be noted here that Gujarat's three regional exchanges, ASE, Vadodara Stock Exchange Limited (VSE) and Saurashtra and Kutch Stock Exchange (SKSE) are considering to merge after SEBI’s new norms announced.
Experts believe that is difficult for RSEs to meet the requirements stated in the SEBI's circular mainly during the present market conditions, when the national exchanges like Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) are facing reduced volumes in the cash segment.