When you say ‘stock exchange’ the first thought that pops into people’s minds is of the two biggies — the Bombay Stock Exchange and the National Stock Exchange. But did you know that ‘namma Chennai’ has its own stock exchange as well? Unfortunately, reports indicate that the Madras Stock Exchange is quite likely to go out of existence come May 30.
One of the first stock exchanges to be established in the country, the Madras Stock Exchange has a history spanning close to a century. It was set up in pre-Independence India, and was the fourth exchange to be established in the country. “It is one of the oldest stock exchanges in the country. While never able to match the turnover of the national stock exchanges, the MSE has always been able to hold its own. Until now, that is,” said one of its members who did not wish to be named.
The regional stock exchange is facing an imminent shutdown due to its inability to satisfy a SEBI (Securities and Exchange Board of India) directive of May 2012 that specified the criteria to be met in order to continue functioning. As per the SEBI norms, stock exchanges must have a net worth of above `100 crore to run a ‘Clearing Corporation’ — a condition that the MSE is unlikely to be able to comply with by the May 30, 2014 deadline. And the turnover is to be scaled up to `300 crore by the end of 2016 .
The issues that have led to the imminent shutting down of the stock exchange though, aren’t unique to this one. Regional stock exchanges, like the Chennai and Bangalore ones, have been unable to reconcile themselves with the economic slowdown in the last few years.
“This is not a malaise particular to the MSE. All regional stock exchanges have been fightinging for existence due to the low volumes of trade,” said M Muruganandam, vice president of Chona Financial Services Limited.
“But this is a problem that only the MSE is likely to be a victim of. It would be nice if SEBI were to give an extension to the MSE, but that doesn’t seem likely at the moment,” he added.
Whether the problem is peculiar to the MSE or not, it is the consequences of the larger economic issues of the recent past that have led to the probable shutdown of the institution. And its fall is as likely to be ignored by the city as its 76-year existence has been.