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Ambarish Mukherjee

New Delhi, Jan. 21 Regional Stock Exchanges (RSEs) are getting ready to deregister themselves as stock exchanges and are filing the relevant applications with SEBI.

Kanpur, Ludhiana, Rajkot, Baroda, Bangalore, Kochi and Jaipur stock exchanges are likely to surrender their licences, senior brokers said.

All RSEs are sitting on prime real estate properties in their respective cities. Though trading has stopped in these exchanges, the members operate through subsidiary companies of the exchanges, which have taken memberships of the National Stock Exchange and the Bombay Stock Exchange.

New SEBI guidelines allow the members to wind up the main exchanges while the subsidiary companies will continue in the present structure, as many brokers function as sub-brokers of these companies.

The main income of the closed stock exchanges is the listing fees they receive annually from the companies.

Companies usually pay because according to the Companies Act, they will have to mention in the directors report of their annual accounts that they have defaulted in listing fees – which no company likes, brokers pointed out.

The closure of these exchanges would stop this secured revenue of the exchanges.

General reserves and assets of the exchanges could be transferred to the subsidiaries. However, the subsidiaries will not be allowed to use the name of the stock exchange as part of their names and will have to rename themselves, exchange officials said.

The exchanges’ reserves under its Investor Protection Fund and Investor Services Fund will be under SEBI’s control. These funds will be transferred to SEBI after meeting all liabilities of the exchanges, officials pointed out.

Also, discussions are on regarding the future of foreign investors’ stake in the regional stock exchanges.

More Stories on : Stock Exchanges

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