The Hindu : Business : Regional stock exchanges get new lease of life

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Saturday, Jan 08, 2005

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Business

Regional stock exchanges get new lease of life

By Our Staff Correspondent

The Union Finance Minister, P. Chidambaram, launching the BSE IndoNext at the Bombay Stock Exchange Convention Hall on Friday. The Chairman, Securities and Exchange Board of India, G. N. Bajpai, looks on. — Photo: Shashi Ashiwal

MUMBAI, JAN. 7. The fall in the Sensitive Index in the last few days is just a market correction and the movement in the capital market was quite orderly after the giddy rise in the last few days, according to the Finance Minister, P. Chidambaram.

Speaking on the sidelines of a function to launch BSE IndoNext here today, the national trading platform to create a new market for small and medium enterprises (SMEs), Mr. Chidambaram said he was not agreeing or disagreeing with the reports that the market crash was `unusual.' He added that investors should be prepared to face the ups and downs of the market. "The Government is not responsible for the Sensex fall. The market sentiment lifts up or pulls it down,'' he said.

The Finance Minister said the Securities and Exchange Board of India (SEBI) had issued show cause notices to four entities for the market crash on May 17, 2004.

Investigations into the `Black Monday' crash were in progress and the government would take strict action against those responsible.

Responding to a query on the Reliance ownership issue, the Finance Minister said the Government had no view on the Reliance feud. "The Ambani brothers, Mukesh and Anil, should settle differences amicably and arrive at a settlement,'' Mr. Chidambaram said.

The BSE IndoNext was launched as a joint project promoted by the BSE and the Federation of Indian Stock Exchanges (FISE), representing 18 regional stock exchanges (RSEs) across the country. Hereafter, eligible scrips listed on RSEs can trade in BSE IndoNext segment through the BSE network. These scrips are now illiquid due to absence of trading at the RSEs. Now, investors in regionally listed companies will be able to realise a fair value for their investments.

Securities of companies below a certain size now trading on BSE's B1 and B2 groups of the BSE will be transferred to IndoNext and these will be traded exclusively on the BSE IndoNext. The participating RSEs would also transfer securities of companies listed on their exchanges to the IndoNext market. Moreover, the SMEs can raise capital, list their shares in the stock exchange of their region and trade through BSE Online Trading and the BSE web trading system — WebeX.

"IndoNext would be a real platform for entrepreneurs of the country who represent the SMEs, which are creating millions of jobs. There are serious liquidity problems for scrips of SMEs on the regional stock exchanges. These markets need to be encouraged,'' Mr. Chidambaram said.

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