CSE revival hinges on trading volumes, technology investments, says SEBI chief

SEBI chairman Tuhin Kanta Pandey stated on Saturday that the revival of the century-old Calcutta Stock Exchange (CSE) hinges on attracting sufficient trading volumes, building a sustainable business model, and making substantial investments in technology. When asked about the West Bengal government's proposal to revive the exchange, Pandey clarified that existing regulatory frameworks do not outright forbid the establishment of new stock exchanges, but any such proposal must adhere to specified governance and capital requirements.

He cautioned that the market landscape has drastically changed since regional stock exchanges operated nationwide, with today's electronic trading enabling investors to access markets from any location. Pandey emphasized that while having an exchange is one aspect, making it viable is a different challenge. Critical considerations for any new exchange include liquidity, with promoters needing to demonstrate enough client activity to sustain operations.

Pandey also stressed the need for heavy and ongoing investments in technology, with requirements anticipated to surge as exchanges grapple with emerging risks such as those posed by artificial intelligence. He questioned whether geographical proximity, once a crucial factor for regional exchanges, would remain relevant in an era dominated by electronic trading.

The CSE had submitted a hold on its exit application in July following the West Bengal government's intention to revive the institution in the state budget. Pandey's remarks underscore that although regulatory provisions permit the possibility of a new exchange, its commercial viability and competitiveness in a market dominated by the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) would be vital. Trading at the CSE ceased in April 2013 due to regulatory compliance issues.