The Securities and Exchange Board of India (Sebi) has recommended to the Vadodara Stock Exchange (VSE) to opt for a voluntary closure by May 30 next year.
On December 11, Sebi’s general manager, market regulation department, wrote to the governing board of VSE and the VSE Brokers’ Forum. The letter stated the regional exchange had failed to comply with the SEBI directive (of June 2012) for a plan to achieve a minimum net worth of Rs 100 crore by May 2015 and Rs 1,000 crore turnover by May 2014.
“It has been noted that you are a non-operational stock exchange since long and you have not submitted a concrete plan for achieving the required net worth for continuing as a stock exchange," the letter said. “It appears that you have no future plans to continue as a stock exchange...your attention is drawn to (our) circular dated May 30, 2012, on exit policy for derecognition of non-operational stock exchanges, wherein an exchange having annual trading turnover on its own trading platform of less than Rs 1,000 crore per year can apply to Sebi for voluntary surrender at any time before the expiry of two years from the date of issuance of the circular, i.e. latest by May 30, 2014...you are advised to comply at the earliest."
G Someswara Rao, managing director of VSE, said: “This is a routine communication from Sebi. Our renewal is pending (for) January next year and the matter is sub judice. We don’t think Sebi can derecognise us with a case pending in court.”
Sebi had issued a notice to VSE on March 23, asking why the exchange should not be derecognised,raising questions on the management’s operations and preparedness for revival. Earlier, Sebi had set March 12, 2013, as a deadline for filing a revival plan, later extended till May 13 at the VSE’s request.
Trading members alleged the public interest directors did not take care of the interests of the minority shareholders and made no fruitful attempts to revive the exchange.
“The public interest directors on the board had convened a meeting in January this year and asked the trading members and all shareholders to prepare a road map to achieve Rs 100 crore net worth. Trading members had submitted the road map in February itself. But the board of directors did not send the roadmap to Sebi, for reasons known to them," said Vishnubhai Patel, president of the VSE Brokers’ Forum.
In its notification issued on June 20, 2012, SEBI had stated that all the stock exchanges which fail to achieve net worth of Rs 100 crore and annual turnover of Rs 1000 crore by 2015, would be derecognised.