SEBI nod for Vijayawada bourse

ENS ECONOMIC BUREAU

HYDERABAD, SEPT 8: The Securities and Exchange Board of India (SEBI) has finally granted "in principle" conditional approval to set up a stock exchange in Vijayawada.

Acknowledged as most potential investment centre, Vijayawada stock market was known for gray market operations during Harshad Mehta times with the punters actively indulging in illegal trading. It may be recalled that SEBI had granted permission earlier to start an exchange in Vijayawada provided the erstwhile foes, the Vijayawada Share Dealers' Association (VSDA) and the Vijayawada Stock Brokers' Welfare Association (VSBWA) bury the hatchet. Trading by these two associations had come to a standstill with the SEBI and the court putting them in the dock.

While giving the conditional approval, SEBI has put forward the following conditions to fulfill within six months before commencing the operations.

The exchange should begin trading only after introducing on-line screen based trading and clearing house;

The exchange shouldestablish a trade guarantee fund/clearing corporation within six months from date of final recognition; and

The exchange should chart out rules, regulations and bye-laws with adequate provisions for investor protection with approval of SEBI and thereafter strictly follow them.

According to L Nagabhushanam, chairman and managing director of Vijayawada Share Brokers Ltd and founder president of the proposed exchange, the screen-based trading system was installed long back and the rules, regulations and bye-laws were already submitted to SEBI.

He said that due to the ``depressed market conditions once again we had to ascertain the interest of the aspirants.'' ``However, to organise between 100 to 150 members would not be a big problem. Each prospective member may have to invest Rs 4 lakh to Rs 5 lakh towards capital adequacy and guarantee fund to the exchange,'' he added.

Hyderabad Stock Exchange, in its earlier writ filed with the Andhra Pradesh High Court, had argued that the exchange should havethe whole of state as its jurisdiction since there is no other exchange in the state. Though Steel City Brokers' Association of Visakhapatnam was awarded sanction of the exchange, it could not be set up for lack of interest from the members due to the poor market conditions.

HSE had recently obtained a status quo order from the High Court not to establish on-line trading terminal by BSE in and surroundings of Hyderabad and Secunderabad municipal limits till the next hearing on September 9, 1998.

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