Isesc Outlines Draft By-Laws

The Indian Stock Exchanges Services Corporation (ISESC), the joint venture stock exchange comprising 12 regional bourses, has drawn up the draft by-laws and business rules of the inter-connected market system (ICMS). In fact, most of the participating bourses have gone on-line and they are now setting up clearing houses for their regional operations. When the new exchange is set up, these systems will be utilised for the ICMS, too.

The ICMS software will be loaded in the terminals of the member brokers of the participating exchanges and the brokers can switch from ICMS and local trading by clicking different icons.

 

ISESC plans to use clearing houses set up by the regional bourses and its representatives will be present at the clearing houses. To ensure efficient functioning, the draft prospectus recommends uniform settlement cycle besides similar margin and exposure limits for ICMS and the regional exchanges.

Once the trading begins on ISESC, the ICMS will open up 12 to 15 regional markets. According to the ISESC participants, this will give an edge to ICMS over the Bombay on-line trading (BOLT) as the latter's expansion is expected to be delayed. Besides, while an agreement for BOLT link-up will at best give a sub-broker status to its members vis-a-vis the Mumbai broker, ICMS will ensure equal status for members of all exchanges, feel the member bourses.

According to the draft prospectus, the exposure limit for the regional exchanges at the ISESC will be fixed on the basis of the base capital committed by each regional exchange, which will be enhanced according to the additional capital brought in. The bourses will fix the individual ceiling for its members.

The regional bourses will be required to open a special margin account, and it will be legally binding to use the deposits in this account only for deals executed on ICMS.

Withdrawals from the margin account, too, will be at the discretion of the ISESC.

In case a default, the entire deposits available with the ISESC will be used to meet the payment obligations on ICMS and in case of surplus amount, the same will be used to fulfill the broker's obligations on the regional bourse, too.