The Bombay Stock Exchange and the Federation of Indian Stock Exchanges have decided to create a national platform for trading in small- and medium-cap companies. The platform, to be called Indonext, is modelled on Euronext, the first multinational exchange organisation in Europe.
The FISE, comprising 20 regional bourses, and headed by Delhi Stock Exchange president Vijay Bhushan, held discussions with BSE officials last week in Mumbai on the modalities of the Indonext platform.
In a press release the BSE said, "Shares of companies with paid-up capital of up to Rs 20 crore (Rs 200 million) listed and traded on the BSE and various participating regional stock exchanges would be traded in the national market through the single order book on the BOLT system of the BSE."
The BSE and FISE will soon submit a joint proposal to the Securities and Exchange Board of India. As per the decision taken after the meetings concluded on November 7, members of the BSE and the regional stock exchanges will be able to trade in this market, whose operations will be managed by the BSE.
Bhushan said the BSE had agreed to transfer 2,260 scrips in its B1 and B2 segments to the Indonext platform. These companies witnessed a daily turnover of Rs 100 crore (Rs 1 billion) in July 2003.
About 1,800 companies of the total 3,800 listed on the Delhi Stock Exchange, which have a paid-up capital of less than Rs 20 crore, will be shifted to the Indonext platform. "A revenue sharing agreement between the BSE and the regional bourses will be worked out soon," he said.
According to BSE executive director and chief executive officer Manoj Vaish, Indonext will not only provide an exit route to investors unable to sell their holdings by generating liquidity but also allow companies listed in the regional bourses to raise fresh capital from the market.
Both the BSE and the FISE consider this a major initiative, which will generate liquidity in shares of small- and medium-cap companies.
This will help investors, companies and a network of about 7,000 members of the regional stock exchanges.
Last year, the Kania committee appointed by the capital market regulator had looked at couple of options to consolidate regional bourses and breathe fresh life into them.
A sub-committee under M R Mayya later proposed a model to merge the small regional stock exchanges on the lines of Euronext.