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Trading firms on closed Madras and Madhya Pradesh exchanges out of NSE too

Some companies said they don't wish to go through listing procedure; others may not qualify due to net worth and liquidity issues

Sneha Padiyath  |  Mumbai 

Over 50 companies of the Madras Stock Exchange (MSE) and Madhya Pradesh Stock Exchange (MPSE), which were also available for trade on the National Stock exchange (NSE), have been removed from the ‘Permitted to Trade’ category of the NSE.

The closure of the Madras Stock Exchange (MSE) and the Madhya Pradesh Stock Exchange (MPSE) has led to the halt in trading of the securities of these companies, an exchange official said.

As per a circular dated January 6, 2015, securities of these companies have been “withdrawn from dealing” from January 30, 2015 onwards. MPSE and MSE had entered into a strategic alliance with the NSE which gave companies listed on their exchanges permission to trade on the NSE as well. These companies did not have a separate listing agreement with the NSE.

“As the MSE and MPSE are no longer recognised as stock exchanges, it was decided that trading in these securities should be halted. But companies can apply for listing on the exchange,” said an NSE spokesperson.

“Of those companies which came in from these two exchanges, five have already been listed on the exchange and are available for trade while five others are in various levels of discussions,” the spokesperson added.

The circular notes the names of 56 such companies which were traded on the NSE. Of these, trading in three of the companies had resumed, a manual check on the NSE website revealed. Some of the more prominent names in the list include Coromandel Engineering of the Murugappa Group, Southern Ispat and Energy and VTX industries among others. Forty-nine of the companies mentioned in the list currently trade on the BSE.

Some of the companies mentioned in the list that Business Standard spoke to expressed their interest in being listed on the NSE while others said that they were content being listed on just one exchange.

“For the time-being we are listed on the BSE and choose to stay that way. As of now, we are not interested in being listed on any other exchange because we do not wish to go through the whole listing procedure again,” said the company secretary of a South-based company.

The listing requirements are less stringent for these companies but even then their migration to the main exchange remains a challenge, exchange officials said.

“The financial health of some of these companies makes it difficult for them to get promoted to the main board. The liquidity in these stocks is also another problem which disqualifies them from moving to the main board,” said a BSE official, adding that the exchange had received requests from companies from regional stock exchanges which had shut down.

MSE and MPSE were derecognised as exchanges after failing to meet minimum net worth and turnover criteria as set by Sebi in 2012.

In 2012, Sebi had asked all exchanges to ensure a minimum annual trading turnover of Rs 1,000 crore along with a minimum net worth of Rs 100 crore and gave them a period of two-years to comply with the norms or face de-recognition. MSE and MPSE both shut down their operations by May 2014, the dead-line for meeting the norms.

Companies exclusively listed on such exchanges were moved to the dissemination board of either BSE or NSE where trading in the scrips was to be conducted through the exchange-designated electronic filing system, directly between seller and buyer. Exchanges have no surveillance oversight on bid and sell offers on these trades and such trades are settled outside the exchange clearing corporations.

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First Published: Wed, February 04 2015. 10:10 IST