Two of the most significant measures were the decisions to allow stock exchanges to open terminals without any restrictions and preventing companies from tapping the public in the garb of software companies.

Sebi, at its Friday board meeting, decided to do remove restriction of stock exchanges from expanding into areas where other exchanges are located. This was an artificial restriction as the National Stock Exchange was free to expand anywhere in the country. Sebi Chairman DR Mehta said now exchanges are free to expand anywhere in the country.

The decision will promote one more national market system alongwith the existing NSE national network. The Bombay Stock Exchange will be the main beneficiary as it has been demanding a level-playing field as part of its Year-2000 agenda.

BSE President Anand Rathi plans to expand the exchange network to all the major metros of the country, the first target being Delhi. BOLT now has a network spread over 250 cities while NSE has terminals in 270 cities. ``By March, 2000 we plan to overtake NSE in our expansion effort,'' was how Rathi reacted to the news.

BSE lost out on the business of the book-building in Hughes Software System's recent mega success float. The book-building through stock exchange was allowed only in terminals located in metros and NSE took advantage of this. But Rathi pointed out that as book-building concept catches up there will be more business coming our way. Besides, Sebi's decision to allow IPO marketing through exchanges will also add to the business. BSE will very soon invite applications from its members for expansion.

Rathi pointed out that BSE will come out with a separate scheme for expansion into areas of smaller exchanges. ``This will be a scheme which will be to the mutual advantage of both BSE and the small exchanges. We intend to the infrastructure of brokers in the smaller exchange. Our members and smaller exchange members can become associate members through the MoU concept,'' he added.

Sebi's decision today to make it mandatory for allotment of shares throug the demat route for the book-built portion will help avoid creation of more paper in future. Sebi also relaxed the norms for book-building giving the option to companies to do away with the need for offer 15 per cent of the book-built portion to retail investors.

Besides, it has permitted companies to retain excess amount raised through book-building provided they make upfront disclosure on how they intend to use the funds.

Sebi also decided to permit the OTCEI to allow trading of unlisted companies through a mechanism restricted to qualified participants. This will help promoters of venture capital find an exit route. The trading will be allowed to be done by qualified institutional investors including corporates, banks and high networth individuals. The basic criterial for such trading participants will be a minimum networth of Rs 2.5 crore. The need for relaxation of listing norms like the compulsory offer of 25 per cent to the public will be waived. In such cases the exchange will not guarantee the settlement.

The Sebi chairman said this is being allowed for OTCEI on an experimental basis. Other exchanges will also be permitted to allow such facility in future.

Ahead of the next round of dematerialisation, Sebi has relaxed the exposure norms for broker depository participants. The minimum networth of Rs 7.5 crore has been reduced to Rs 50 lakh, while the exposure limit of holding beneficial shares has been expanded to 100 times the networth.

INSIGHT
Good news for investors

Sebi's decision to allow regional stock exchanges to expand to all cities will create a level playing field between the BSE and the NSE. Currently, only the NSE has the right to put up terminals in any city on its own; the BSE can do so only with the concurrence of the regional exchanges. The decision will intensify competition between the country's top two bourses, squashing the business potential of the surviving regional exchanges, the OTC Exchange and the Interconnected Stock Exchange. However, the real payoff will be improved market depth and a truly efficient and national trading system which will benefit all investors.