E-Paper
UP Stock Exchange in troubled waters
UTTAR PRADESH Stock Exchange (UPSE) may face closure if it failed to introduce demutulization by the new deadline of August 2007. This is the third time that the Exchange has been given extension of time for adopting the new system of administration of the Exchange.
UTTAR PRADESH Stock Exchange (UPSE) may face closure if it failed to introduce demutulization by the new deadline of August 2007. This is the third time that the Exchange has been given extension of time for adopting the new system of administration of the Exchange.
The process of demutulization is being delayed, as the brokers have not been able to decide about waiving any one of their rights of membership and the trading. As per new rules of the Security Board of Exchange of India (SEBI), a single person cannot avail two rights at the same time.
However, it is the biggest problem before the brokers as to which right should they give up. The brokers made several enquiries from the Exchange and also from the SEBI if they could transfer their any of the rights to their family members, including son, daughter and wife. But they did not receive any satisfactory reply from the two agencies.
Some of the brokers alleged that in fact the SEBI officials were themselves not clear about the transfer of rights to the family members and hence they were deliberately lingering on the issue. They said the SEBI officials admitted the fact that the transfer to family members was not very clear to them. They have asked the solicitors to clarify the provisions of the Act.
According to brokers they were in a fix. Neither they could waive their any of the rights outright nor they could transfer their right to unknown persons except their own family members.
They said they were waiting for the final decision of the SEBI. However, they would not allow the Exchange to be closed. If an emergent situation arose they might take any decision to protect the Exchange from being closed.
Talking to HT, the administrator of the UPSE KD Gupta said that the Exchange has lost its business potential. Out of five hundred members, only 125 members were active at the Exchange. Unless the Exchange acquired the membership of the National Stock Exchange it would not be able to pick up the business volume.
Gupta said that the upse needed Rs 4 crore for obtaining license from the NSE. The huge fee amount could not be borne by the Exchange itself. If the members contributed to it the Exchange could get the membership of the NSE for trading.
To a question, Gupta said that since NSE had the future and option business practice. These practices were said to be more income catching and the brokers required this kind of trading. But trading in future and options could only be done through this Exchange if it acquired the membership of the NSE, he added.
