The Inter Connected Market System (ICMS) aimed at linking regional exchanges has got a shot in the arm following Jaipur and Kanpur bourses' decision to join the system.

The ICMS top brass comprising of MR Mayya, advisor, Joseph Massey, managing director and V Shankar, director are currently on a roadshow round the country. After tasting success at Bangalore yesterday, when the EGM endorsed the ICMS system, the officials are now in Chennai hoping to get a favourable decision. Next on their agenda are visits to Calcutta and Delhi. They are also in talks with the Ahmedabad bourse authorities and are hopeful of a favorable decision soon.

The ICMS got off to a flying start by floating a company called Indian Stock Exchanges Services Corporation Ltd (ISESC). The company has premises at Andheri in Mumbai. The USP of the ICMS was that it would be a platform for regional exchanges to achieve inter-connectivity among themselves, thereby increasing the number of scrips at each bourse.

Even as the question of survival of regional exchanges hangs fire, the bigger bourses have decided to spread wings and thereby acquire more teeth and thwart ICMS plans.

The ICMS is seen as a common front aimed at thwarting the expansionist tendencies of Bombay Stock Exchange's BOLT and the National Stock Exchange (NSE).While all the players have started work in real earnest to get their systems in place, one question that remains unanswered is the viability of such systems. If one were to take a closer look at ICMS as well as BOLT, one finds there is little difference. Only the names are different.

Take the case of BOLT. BSE has been the numero uno bourse in the country from time immemorial. The bourse has had a dominant presence in the capital markets. The trends there have tilted fortunes at all bourses. If the Sensex rose at BSE so did the fortunes of many scrips at all exchanges. If the BSE developed a chill and the Sensex fell, then so did the fortunes at other stock exchanges (SEs).

This single factor had led the BSE authorities to feel that they were the most important capital market persons. As times changed, however, they did not change. They became more high and mighty and refused to step down from their high portals.

When the National Stock Exchange came on the horizon, the compalcent BSE authorities dismissed it as another bourse. They, were, however, in for a shock. The NSE authorites, armed with the latest in technology and the promise of a national market, started eating into BSE's pie. The growth was indeed alarming. The NSE decided to go boldly where no other bourses had gone i.e. connecting far-flung areas. Business volumes improved and so did the fortunes of the NSE. The number of scrips on the bourse started rising and so did the members.

The dormant BSE authorites woke with a shock when they found that the ground under them was slipping. They also got into the act and drew up ambitious plans for their on-line trading system - BOLT which was finally in operation after innumerable snags. The authorities decided that the NSE expansion had to be checked and drew up a plan whereby any regional exchange could join them. The NSE officials on their part remained gung ho that BSE could at no stage match their technical expertise and reach.While the Big Two were fighting the battle for supremacy, they did not take into account any of the regional exchanges. Both felt that once the numero uno slot was settled, it would only be a matter of time before these exchanges joined them. But they were in for a shock. The regional bourses, long victims of neglect and Big Daddy attitude decided to throw in their gauntlet as well. The first step was the formation of the Federation of Indian Stock Exchanges (FISE) and later the Inter Connnected Market System (ICMS).

But the question left unanswered by all of them is what is the difference? BSE says that they have become more open unlike in the past However, many feel that the BSE can stake its claim for a national market only after it has proved itself in Maharashtra. There are areas like Kolhapur, Sholapur, Ratnagiri etc which do not have regional bourses. The volumes from these areas are supposed to be huge, but still lie untapped. ``Let them grow apples in their backyard first and once they are successful they can come to us,'' opined a leading BgSE broker.

In the case of NSE many feel that it is slowly going the BSE way. The once-open NSE officials are today like bureaucrats. Brokers complain of the inordinate delays in settling problems with NSE. ``When NSE came many thought it was the right thing at the right place. But today we are disappointed with them. They have also not taken the interests of brokers at heart,'' says a leading NSE broker based in Bangalore.

As far as ICMS is concerned, though officials say they have a solution for every problem, only time will tell. Many brokers are sceptical about the success of the system. ``In a country with vast geographical dissimilarities it is difficult to bring bourses across the country under one umbrella. There will be problems of language, operations etc,'' said a leading broker.

``ICMS says it offers a hybrid system for brokers to trade in - national as well as regional market. When business is bad regionally itself, what advantage do I get in a national market? Similarly once big bourses like DSE, CSE etc join the ICMS they will hog the limelight. It will become like the BSE where it is a cartelisation of big brokers,'' adds a broker.

Operational snags is one area where all the three systems come a cropper. With so much dependence on computers, lease lines and Vsats, there is virtually no back up in case the systems fail. Both BSE and NSE have had bad experiences with these and for ICMS it will be an acid test once it becomes operational.

Circuit breakers and filters are there in all the three systems. But the markets are always speculation-driven and so the interest in scrips which have hit the circuit breakers will continue. ``Stopping trading in a particular scrip for some time will not drive away the speculators. They will return after the period of suspension is over. What will the authorities do then,'' asks a NSE broker.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.