The Hindu : Kerala / Kochi News : Cochin stock exchange celebrates Silver Jubilee

Online edition of India's National Newspaper
Friday, Dec 30, 2005

Kerala

Kerala - Kochi

Cochin stock exchange celebrates Silver Jubilee

Special Correspondent

ON THE GROWTH PATH: The Cochin Stock Exchange building

KOCHI: The Cochin Stock Exchange (CSE), which pioneered the development of securities market in the State, is celebrating its 25th year. The Silver Jubilee was held in Kochi.

The exchange was formed in 1978, incorporated as a company and got the recognition from the Union Government in 1979 under the Securities Contracts (Regulation) Act, 1956.

The trading operations commenced in 1980, which were till then carried out through brokers located outside the State. CSE is the only recognised stock exchange in the State and it has done pioneering work in spreading equity consciousness and developing the securities market. It all started with 14 individuals coming together to form the stock exchange.

The Cochin Stock Exchange is directly under the control and supervision of the Securities and Exchange Board of India (SEBI), the regulating authority, and is today a demutualised entity in accordance with the recent amendments to the securities laws made by Parliament, says R.K. Pillai, executive director.

Demutualisation essentially means de-linking and separation of ownership and trading rights and restructuring of the board in tune with corporate governance norms. The first phase of de-linking the ownership and trading rights as also board restructuring has since come into effect.

In the second phase, the ownership, which is presently held by the members of the exchange, will also undergo a change in that 51 per cent of the share capital will be held by the public, other than stock brokers, within the next one year.

The exchange is professionally managed under the overall direction of the board of directors. The board comprises professionals from various fields such as legal, administration and management, who are popularly known as Public Representative Directors.

The composition of the board is such that 3/4th of the total strength of the board is now constituted by Public Representative Directors and Government / SEBI nominee directors and the balance 25 per cent is represented by the brokers of the exchange.

This change at the board level is aimed at effectively addressing the concerns regarding perceived and real conflicts of interest of the broker members on the management of the exchange, says Mr Pillai.

The Cochin exchange was the first exchange in the country to introduce computerisation and "e-trading" (online trading) in 1990, much before the NSE was formed. As a matter of fact, at one point of time it was ranked the third largest exchange in India.

It was because of this reason that people from all parts of India - Mumbai, Ahmedabad, Kolkata, Punjab - have taken membership of the exchange.

However, the then prevailing rules, restricting expansion of terminals outside the municipal limits of Kochi and the subsequent fall in the market adversely affected its trading activities.

To counter this situation, the exchange, in accordance with the SEBI guidelines, set up a wholly owned subsidiary company the Cochin Stock Brokers Limited, which is a corporate member of both the Bombay Stock Exchange and the National Stock Exchange and also a depository participant of the Central Depository Services for providing trading facilities to investors through the members of the exchange.

The stock exchange's subsidiary has a predominant presence all over the State, through the vast network of its members with more than 250 trading terminals and a few of them even working outside the State.

Any investor dealing with the exchange subsidiary will now receive payments and shares directly in his name and can be assured of safety and transparency in transactions.

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