'It Is Just A Matter Of Perception That Otc Is Dead'

How soon do you think the exchange would be on a revival path if all the recommendations are accepted and implemented?

It will not come very soon. It will take over a year for the exchange to pick up and be on a rising curve.

Why in the first place do you think the exchange has been relegated to this state?

The declining trend is nothing exclusive to the OTC exchange and the exchange has been affected by the overall state of the capital market today.

So, it is just a matter of perception that the exchange is almost a dead one, which has led to this belief that the there is no hope for OTCEI. I think OTCEI has a great future.

 

Then why at all was there a need for revamp?

We saw some merit in the arguments of the different segments of OTCEI. There is no support system co-existing along with the advanced procedures adopted by the exchange.

For example, the T+3 rolling settlements system was highly restrictive for dealers as the banking system is not geared up to meet the requirement. We have tried to bring about a delicate balance keeping the exclusivity of the OTCEI intact, but allowing some convenience of trading at the same time.

The committee seems to be largely depending on the market making and the sponsorship on the exchange. But market making has not been so successful on the exchange?

Till October 1994, market making has been a very successful concept and market makers have been very active. In a declining market the low market making activity is a natural consequence.

The committee has recommended grading of market making on the basis of the size of the issue. But instead of doing this the committee could have ensured how the funding facility could be provided to market makers?

RBI has already given permission for funding of market makers. But no one isg sessions and it enabled us to understand each others' point of view.