Tuesday, April 10, 2007

Calcutta Stock Exchange facing problems in demutualization

The Calcutta Stock Exchange (CSE) seems to be facing a huge problem in its demutualization scheme. After having failed its original deadline for soliciting expressions of interest (EoIs) on March 23, it has again failed in its efforts to rope in strategic investors, as it has received insufficient response to the revised deadline of March 5. It is now further extending the date for submitting EoIs to April 30.

The CSE and its consultant-advisor PriceWaterhouseCoopers are conducting road shows within India and overseas to hard-sell the benefits of picking up a stake in CSE. PriceWaterhouseCoopers has already made presentations to leading bourses in Asia. Some of them are interested, but the main hindrance is the 5% limit in investment

As per SEBI guidelines, all exchanges have to divest 51% to financial institutions (FIs), foreign institutional investors (FIIs) and corporate bodies other than broking outfits before August 2007. The guidelines state that no individual investor, be it FIs, FIIs or corporates, can hold more than 5% in an individual capacity in any stock exchange. The collective holding of the non-brokers would be 51%, whereas brokers would hold 49%.

Currently, there is very little trading which happens on the CSE, which was once India's third largest bourse with a daily turnover in excess of Rs. 1000 crores.

Read the article in The Times of India article.
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