Regional stock exchange trading dried up even before Sebi pushed for exit

They accounted for less than 0.2% of cash market turnover ahead of 2012 circular

Out of the 17 regional stock exchanges active before the May 2012 regulatory exit circular, 16 recorded zero turnover. 

The Calcutta Stock Exc­ha­nge was the only one with some activity. It had a 0.17 per cent share of the total cash market turnover in financial year 2011-12 (FY12). The West Bengal government has ann­ounced in its Budget that it would make efforts to help restart the 118-year-old excha­nge. 

The bourse is the only one of the regional stock exchanges — out of more than 20 that were around at the turn of the century — that has not made a complete exit. Many of the regional stock exchanges had regained some of their lost momentum after a September 23, 1985 finance ministry circular, which required all listed companies to also list locally where their registered office or substantial portion of their operations is situated. But this importance quickly faded in the electronic age, despite many revival attempts, shows a perusal of various regulatory committee reports, circulars, and board meeting minutes. 

The establishment of the National Stock Exchange (NSE) and the rise of electronic trading — which the BSE also ad­apted to — diminished the need for local stock exchanges by enabling location-independent trading on national bou­rses. By 2001-02, there was no trading at all in seven out of 21 regional bourses existing at the time. 

While there is room for more competition in the exchange segment, experts paint a challenging picture for the revival of the Calcutta Stock Exchange. Regional stock exchanges have limited utility in the current environment where national exchanges have a presence across the country, noted Ashish Goyal, formerly the whole-time director of the Madhya Pradesh Stock Exchange. Building a sufficiently liquid market wo­uld also be a challenge, according to Goyal. “Practically, it looks very difficult,” he said. 

There are attendant costs to becoming an effective exch­ange, including having sufficient financial capital to ensure cybersecurity concerns are addr­essed, noted Joshy Jacob, professor at the Indian Institute of Management, Ahmedabad. 

“To remain above the threat level and to make sure that there is no untoward incident require significant capital. It cannot happen on a viable basis if one is processing a few million orders a day,” said Joshy. The NSE, for comparison, processed 20 billion orders in a single record-breaking day in 2024. 

The NSE’s FY26 technology spends were ₹1,315 crore, up 29 per cent over the previous year. The BSE spent ₹203.1 crore in technology expenses in FY26, up 24 per cent over the previous year. The Calcutta Stock Exch­ange, after more than a decade of inactivity, had revenues of ₹26.8 crore and recorded a loss of ₹21.8 crore in FY25. It had total assets of ₹405.3 crore. 

There have been numerous initiatives to revive regional stock exchanges. More than a dozen of them came together to form the Inter-Connected Stock Exchange of India in 1998. The move sought to attract investors through the large number of companies listed across all the exchanges being brought together on a single platform. But trading was limited. Another attempt involved setting up broking subsidiaries which would take membership of the NSE and the BSE. The brokers of the regional stock exchange could thus function as sub-brokers of these subsidiaries. A 2006 Securities and Exchange Board of India (Sebi) report titled “Report of the Committee to Study the Future of Regional Stock Exchanges (RSEs) – Post Demutualisation” noted that regional stock exchanges helped local companies raise capital and expanded equity culture. 

“But with the advent of modern telecommunication and information technology, and the symbiotic interaction of technology and the markets, which facilitated a fundamental transformation of the market microstructure, the scope of the RSEs became limited till they virtually lost their relevance,” the report said. 

It noted regulatory concerns with the way some of the bourses were being run, and underscored lacunae in their systems. Indeed, the 2001 Ketan Parekh scam also involved a payment crisis at the Calcutta Stock Exchange.

 

The end of the “badla” system also affected one of their last advantages. Exchanges had different weekly settlement cycles till June 2001. This allowed brokers to move positions from one exchange to another, which provided some turnover to regional exchanges. This also went away with the introduction of derivatives. 

The authorities issued a circular in 2003 removing the regional listing requirement of 1985. 

Exchanges struggled to stay relevant until a 2012 Sebi circular required a ₹1,000 crore trading turnover within two years, warning that non-compliant bourses would face compulsory exit. There was also a ₹100 crore net-worth requirement. Despite some court battles, most bourses exited. Only the Calcutta Stock Exchange remained as of 2026 from the 17 that were around before the circular. Calcutta’s bourse too had filed for exit in 2025 before the latest Budget announcement. 

The Budget cited the need for a local bourse, which could help raise capital for regional companies. Regulatory data does show that the eastern region accounted for less than 5 per cent of total equity capital mobilised through public and rights issues in FY26. The eastern region’s share has remained in single-digits in recent years. The NSE data shows the share of unique investors from West Bengal has fallen from 6.5 per cent in FY15 to 5.9 per cent in FY27 (May data). 

Jayanth R Varma, distinguished professor at the Dhirubhai Ambani University, said that a reimagined Calcutta Stock Exchange may have a role to play as part of a broader move to help businesses and spread equity culture in eastern India. The brand and its historical legacy can provide an umbrella for an investor education institution or a specialised bourse for small and medium enterprises (SMEs) rather than being one more stock exchange like the ones already existing at the national level. A reborn Calcutta Stock Exchange might also have the potential to act as a gateway to equity capital for international businesses from nearby countries, which may be culturally and geographically closer to West Bengal than Maharashtra. 

“I think, with India at this stage of economic growth, there is a need to spread the entrepreneurial...(and)...investing culture more widely,” Varma said. 

An email sent to the Calcutta Stock Exchange did not elicit a response. 

Timeline for exit of key bourses

• January 25, 2013: Hyderabad Securities and Enterprises
• April 3, 2013: Coimbatore Stock Exchange 
• December 8, 2014: Inter-Connected Stock Exchange of India 
• December 23, 2014: Cochin Stock Exchange 
• December 26, 2014: Bangalore Stock Exchange 
• January 27, 2015: Gauhati Stock Exchange 
• February 9, 2015: Bhubaneswar Stock Exchange 
• March 23, 2015: Jaipur Stock Exchange 
• April 13, 2015: Pune Stock Exchange 
• May 14, 2015: Madras Stock Exchange 
• June 9, 2015: Uttar Pradesh Stock Exchange 
• June 9, 2015: Madhya Pradesh Stock Exchange 
• November 9, 2015: Vadodara Stock Exchange 
• January 23, 2017: Delhi Stock Exchange 
• April 2, 2018: Ahmedabad Stock Exchange 
• May 8, 2019: Magadh Stock Exchange

Source: Sebi