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Sebi moots merger of regional exchanges

Rakesh Sharma & Janaki Krishnan in Mumbai

The Securities and Exchange Board of India has mooted a proposal to form a single unified exchange by merging all the 19 regional exchanges in the country.

Senior Sebi officials said the capital market regulator's brass met the regional exchanges on Wednesday and discussed the matter but no decision was arrived at. "They asked us for the meeting," a senior Sebi official said. Sources said the regional exchanges had long been worried about their existence with falling volumes and little business.

The modalities of the merger of the exchanges had to be worked out, sources said.

According to one school of thought, the exchanges might be made a part of the National Stock Exchange and would function as trading windows of the NSE. Alternatively, these exchanges could well become one single entity in their own right as a competitor to the NSE and BSE.

The model being followed is that of Euronext, which was created last September by the merger of the exchanges in Amsterdam, Brussels and Paris. Each of these centres trades on its own but the clearing and settlement systems are unified. The board has representatives of the various centres.

There are 19 regional exchanges in India, an Inter-connected Stock Exchange of India Ltd and an Over The Counter Exchange of India.

While matters relating to the survival of the regional exchanges dominated the meeting, the current market situation was also discussed.

Sebi officials said they had asked the major exchanges, the BSE and the NSE, to furnish details of unusual stock positions in any scrip - in both the derivatives and cash segments.

Huge long positions in margin trades have been worrying the market for some time now - and Sebi is understood to have taken cognisance of this when it asked for details on such positions.

Closely related to the merger of the exchanges are also the issues of corporatisation and demutualisation of the exchanges, which have been hanging fire for some time now.

Sebi officials said the issue in corporatisation revolved around the appropriate model to adopt since most of the members were not happy with the NSE model, where broker-members do not have any say in the running of the exchange.

Sebi officials said chairman G N Bajpai also made a mention of the listing procedures prevalent and how companies were getting listed through reverse mergers with existing listed entities on the regional exchanges.

Bajpai, it may be recalled, has been pushing for the establishment of a Central Listing Authority, which will set out uniform listing norms.

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