The Telegraph
Monday , June 30 , 2014
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Jitters over listing switch

Bourse Calling

Calcutta, June 29: Companies registered with regional bourses are wary of upgrading to national stock exchanges despite Sebi rules to help them in the transition.

Sebi had directed national bourses such as the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) in May to create a “separate dedicated cell to expedite the processing of listing requests from such companies”.

These guidelines were issued as a part of the derecognition of regional stock exchanges with an annual turnover of less than Rs 1,000 crore.

V.R. Narasimhan, chief of regulations of the NSE, said the exchange had set up such a separate cell.

“We have already set up a dissemination board and it is operational in the last few months. But the response has not been encouraging,” Narasimhan said.

According to industry observers, smaller companies are often reluctant to upgrade to a national exchange because of factors such as higher expenses and stricter listing norms.

The initial listing fee for the NSE is Rs 50,000 and Rs 20,000 for the BSE. For regional stock exchanges, it is around Rs 15,000.

Further, annual listing fees for companies with a listed capital of up to Rs 10 crore in the BSE is Rs 1 lakh and Rs 90,000 in the NSE. It is lower in the regional bourses.

Also, listing at national exchanges requires greater disclosure. Companies registered in regional bourses often do not maintain the necessary paperwork for such disclosures.

Narasimhan said the high listing expenses could be a reason for the poor response. However, there are several “vanishing” companies that are looking at an exit route from the capital market, Narasimhan said.

Besides issuing guidelines for exit options, Sebi had asked every stock exchange to have its own clearing corporation or outsource the work to a recognised clearing corporation.

The bourses were also required to maintain a minimum net worth of Rs 100 crore.