The Calcutta Stock Exchange revival will depend on the century-old institution meeting strict financial, technology and regulatory conditions before it can resume trading, Securities and Exchange Board of India chairman Tuhin Kanta Pandey said in Kolkata on Saturday.
Pandey said the exchange must demonstrate a minimum net worth of Rs 100 crore and achieve an average annual turnover of Rs 1,000 crore to operate as a stock exchange. Trading on the CSE has remained suspended since 2013–14, when its annual turnover had fallen to around Rs 90 crore, he said.
The SEBI chairman was responding to a question about the BJP government’s proposal to revive the exchange in West Bengal. He said the CSE would have to attract sufficient trading volumes, develop a sustainable business model and invest substantially in the systems required for a modern securities market.
“The history of the Calcutta Stock Exchange goes back several decades,” Pandey said. “Most of the other regional stock exchanges have already wound down their operations. Now, if the Calcutta Stock Exchange wants to revive its operations, there are certain regulations that it must comply with.”
Among the requirements is the submission of a business plan setting out how the exchange would operate sustainably. The CSE would also have to create infrastructure for the orderly execution of trades, including an online, screen-based trading system and online surveillance capabilities.
SEBI has additionally required cybersecurity controls and a cyber-resilient framework. The exchange would need a nationwide network of trading members with adequate facilities to admit and regulate them, according to the chairman’s remarks.
The conditions also cover unresolved financial and settlement responsibilities. The CSE must settle all outstanding dues payable to brokers and other stakeholders. It must either establish a separate clearing corporation or enter into an arrangement with an existing clearing corporation to settle trades.
These requirements place the proposed revival beyond a simple reopening of the exchange’s trading platform. The CSE would need to demonstrate financial capacity, operational systems, market participation and regulatory readiness before it could seek permission to resume operations.
Regional stock exchanges in India have largely wound down their operations, Pandey said, making the CSE’s proposed return an exception that would have to be assessed against the current regulatory framework. Its historical importance alone would not remove the need to meet the requirements applicable to an operating stock exchange.
“That is where the matter currently stands,” Pandey said. He added that if SEBI received further communication from the exchange indicating its intention to continue operations, the proposal would be examined against the prescribed conditions.
The immediate next step is therefore for the CSE to communicate its intentions and submit the required business and compliance details. SEBI will then assess whether the exchange meets the financial, technological, regulatory and settlement conditions for a possible revival.
