Chatterjee: Expansion mode

Calcutta, Nov. 24: Lyons Range — the second oldest bourse in the country — is looking to spread its tentacles by offering deposit-based membership to brokers in the eastern and northeastern regions.

“Stock exchanges in Bhubaneswar, Patna and Guwahati have become almost defunct. This gives us an opportunity to expand our reach to investors in the eastern and northeastern states. So, we have decided to introduce deposit-based membership to increase the number of trading members and investors,” said Dipankar Chatterjee, the new chairman of the Calcutta Stock Exchange.

A deposit-based member will have trading rights both on CSE’s own C-Star and BSE’s BOLT trading platforms (in the cash market segment only) but will not hold any equity in the exchange which became a corporate entity two years ago.

Trading membership will be given against a deposit of Rs 10 lakh. At present, the CSE has 877 registered members but only about 100 are active.

“We have got a very good response so far and the applications are now under the consideration of Sebi,” said Molly Thambi, managing director and chief executive officer of CSE.

It is learnt that the CSE has so far got more than a dozen applications for deposit-based membership.

A few months back, the exchange had floated a wholly owned subsidiary, CSE Capital Markets, with an authorised capital of Rs 5 crore and a mandate to become a trading member of any recognised stock exchange in the country.

“CSE Capital Markets has received approval from the NSE to trade on its platform,” Chatterjee said. The CSE has applied to Sebi under section 13 of the Securities Contract and Regulation Act to kick-start the process.”

Sebi approval will allow the member brokers of CSE Capital Markets to issue contract notes to their clients for transactions on the NSE.

Without this approval, the individual member brokers of the CSE cannot issue separate contract notes to their clients as they will not be able to trade on the NSE platform on their own.

This arrangement is different from the one with the Bombay Stock Exchange under which CSE members can trade and issue contract notes to their clients for trading on the BSE Online Trading system (BOLT).

In the future, CSE Capital Markets will also undertake trading in mutual funds using the platforms of the BSE and NSE, insurance broking, custodian and depository services.

The Calcutta bourse’s move to access NSE’s trading platform in addition to BSE’s BOLT will increase trading volumes on the century-old bourse that is trying to “rebuild trust” among the investor community.

“We have over 2,600 companies listed on the CSE,” said Chatterjee. “This is a huge pool and we must capitalise on this to increase the turnover of the stock exchange — that is our primary target at the moment,” he said.

“We are not going to venture into something different for the time being. We will, however, follow the BSE on its new initiatives,” he added. BSE owns a 5 per cent stake in CSE.

According to Chatterjee, the CSE is the leading the regional stock exchanges. “As of March 31, 2009, we had a listing fee income of Rs 4.34 crore compared with Rs 1.75 crore at the Delhi Stock Exchange (as of March 2008) and Bangalore Stock Exchange’s Rs 29 lakh (as of March 2009),” he said.