Calcutta Stock Exchange Explores Routes To Resume Equity Trading

The Calcutta Stock Exchange (CSE) is looking to make a return to equity trading and has approached the Securities and Exchange Board of India (SEBI) for guidance on the way forward.

The 118-year-old exchange is considering two options. It could restart trading through an interoperability arrangement or set up its own clearing corporation. CSE officials are now examining the regulatory requirements for both routes.

The exchange is expected to meet SEBI next week to discuss the compliance requirements, according to people familiar with the matter.

CSE Weighs Interoperability Option

Using an existing clearing setup could offer CSE a quicker route back to the market.

If permitted by SEBI, the exchange could use the clearing operations of either the National Stock Exchange (NSE) or the Bombay Stock Exchange (BSE) under an interoperability arrangement. This would allow CSE to avoid the time and resources required to establish a separate clearing corporation.

Setting up its own clearing corporation, on the other hand, would involve a longer process and additional regulatory requirements.

A senior CSE official said the exchange wants to first understand SEBI's compliance requirements before deciding on its revival plan.

Exchange Seeks Regulatory Clarity

The CSE was once one of India's biggest stock exchanges by trading activity. It was the country's second-largest bourse by trading volumes at one point.

Its history also includes a serious crisis in March 2001, when the exchange came close to defaulting on its settlement obligations. The episode led to greater scrutiny of its operations and subsequent changes in the way trading and clearing were handled.

CSE officials are now reviewing the regulatory framework before settling on a plan to restart equity trading.

The West Bengal government is also closely watching the developments. State finance minister Swapan Dasgupta said the government is waiting for the management to present a roadmap for reviving the exchange.

For CSE, the immediate task is to determine which route can meet SEBI's requirements. An interoperability arrangement could make the process relatively simpler if the regulator gives its approval.

The exchange's discussions with SEBI next week are therefore expected to provide greater clarity on its proposed return to the equity market.

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