Inter-connected Stock Exchange of India
Encyclopedia
Inter-connected Stock Exchange Ltd. (ISE) started its operation in 1998 in Vashi
, Mumbai
. It is a national-level stock exchange
, providing trading, clearing
, settlement
, risk management
and surveillance support to its trading members. It has 841 trading members, who are located in 18 cities. These intermediaries are administratively supported through the regional offices at Delhi
, Kolkata
, Patna
, Ahmedabad
, Coimbatore
and Nagpur
, besides Mumbai
.
The ISE is promoted by 12 regional stock exchanges namely at Bangalore
, Bhubaneshwar, Chennai
, Cochin, Coimbatore
, Guwahati
, Indore
, Jaipur
, Kanpur, Mangalore
, Magadh and Vadodara
. The participating exchanges of ISE have 4,500 members and listed securities. It is a stock exchange of stock exchanges, members of the stock exchanges being traders on the ISE.
Ltd., (NSE) in 1994 with an all-India spread and expansion of operations of Bombay Stock Exchange
(BSE) throughout the country, both of which have their trader work stations at over 400 centres in the country today, have led to the virtual extinction of all the 19 Regional Stock Exchange (RSEs) spread across the length and breadth of the country.
The share of 19 RSEs, which was as much as 45.6 per cent of the total all-India turnover of Rs. 2.39 lakh crore in 1995-96, declined progressively year after year and in 2001-02, it was just 8.4 per cent of the total volume of Rs. 8.96 lakh crore. At present, there is virtually no trading at any of the RSEs. Trading in the cash segment is thus confined to NSE
and BSE
only, with the share of the latter, which used to account for over 70 percent of the all-India volume of trading till 1995, is also progressively declining. Currently, BSE accounts for about 30 per cent of the aggregate volume of trading on NSE and BSE in the cash segment. In the derivatives segment, while NSE clocks in about Rs. 2000 crore daily, the turnover on BSE has been progressively declining virtually to the zero level. The RSEs of the country and their members had spent over Rs. 200 crore in automating their trading, clearing and settlement systems, largely driven by regulatory compulsions, sadly to witness them lying idle at present.
and Ludhiana Stock Exchange Association
and also at a few other exchanges, which conducted Badla trading but in a clandestine manner, dealt a serious blow to trading at the RSEs. Introduction of uniform trading cycles at all the stock exchange, also effective from July 2, 2001, reduced further the volume of trading at the RSEs due to diminished opportunities for arbitrage transactions. Introduction of compulsory rolling settlements, initially in a few securities and subsequently in all securities effective from December 31, 2001 on a T+5 bases accelerated the reduction in turnover at the RSEs.
The switch over of the rolling settlement to T+3 effective from April 1, 2002 and to T+2 with effect from April 1, 2003 sealed the fate of the RSEs.
Yet another major reason for the absence of trading at the RSEs is that all the major operators are all these exchanges acquired memberships of either NSE or BSE or of both, while most others acquired the sub-brokerships of members of NSE/BSE and all of them switched over their operations completely to NSE and BSE.
In spite of the fact that trading at the RSEs has ground to a halt, RSEs have managed to survive so far because of the annual listing fees that are being received from the listed companies.
The circulars issued by the Ministry of Finance on April 23, 2003 withdrawing its earlier circulars which required all companies including existing listed companies, to be listed on the stock exchanges located in the State where the registered office or the main works/fixed assets of the company are situated, has led to the conclusion of RSEs as companies have started lining up one after the other to get themselves delisted from the RSEs.
, apart from NSE, BSE and OTCEI) was incorporated on ISE by SEBI under the Securities Contracts (Regulations) Act, 1956 on November 18, 1998, ISE commenced trading on February 26, 1999.
ISE was launched with an objective of converting small, fragmented and illiquid markets into large, liquid national-level markets. This was a unique experiment, with a highly automated trading, clearing and settlement systems backed by state-of-the-art computers. ISE is also a professionally managed stock exchange
with the Chairman of the Exchange being also a Public Representative Director from its inception. Unfortunately for the RSEs, particularly small brokers, the ISE experiment did not succeed. The daily turnover, which used to be Rs. 1 to 2 crore in the first six months, gradually declined to virtually zero level. Failure of ISE was, due to the bigger brokers of the participating RSEs failing to support any interest in trading on ISE due to commercial considerations. As a result, it becomes virtually impossible for ISE to create any worthwhile liquidity in its markets in competition with the breadth and depth of NSE and BSE. Markers continued to be fragmented as the participating RSEs did not close down their regional segments. All the while the small fragmented and illiquid market failed to emerge. ISE has also not succeeded in getting companies listed on it despite the stipulation by SEBI that the State of Maharashtra constituted the regional area for ISE due to lack of regulatory support for making it applicable to over 3,000 already listed companies in the State of Maharashtra.
October 26, 1996 Steering Committee was constituted by FISE at Hyderabad.
January 4, 1997 Pricewater House Coopers,the management consultancy firm, submitted a feasibility report and recommended the establishment of ICMS.
January 22, 1998 ISE incorporated as a company limited by guarantee.
November 18, 1998 SEBI grants recognition to ISE.
February 26, 1999 Commencement of trading on ISE.
December 31, 1999 Induction of 450 Dealers commences.
January 18, 2000 Incorporation of ISS as a company limited by share capital.
February 24, 2000 SEBI registers ISS for the Capital Market segment of NSE.
May 3, 2000 Commencement of trading by ISS in the Capital Market segment of NSE.
January 10 , 2001 Turnover in the Capital Market segment of NSE crosses Rs. 1000 million per day.
February 28, 2001 Turnover of Rs. 1508.80 million recorded by ISS in the Capital Market segment of NSE.
May 4, 2001 Internet trading for clients started by ISS for the NSE segment through DotEx Plaza.
May 19, 2001 ISE’s website, www.iseindia.com, launched.
February 13, 2002 SEBI registers ISS for the Futures & Options segment of NSE.
May 6, 2002 ISS commences trading in the Futures & Options segment of NSE.
March 12, 2003 ISS admitted as a member of the Equities segment of BSE.
April 1, 2003 DP services through CDSL launched by ISE.
June 21, 2003 First Investor Education Program under the Securities Market Awareness Campaign (SMAC) of SEBI conducted at Vashi.
January 9, 2004 Peak turnover of Rs. 3034.90 million recorded by ISS in the Capital Market segment of NSE.
May 17, 2004 First DP branch office opened at Coimbatore by ISE.
July 17, 2004 First Investor Point opened at the Vashi Railway Station Complex by ISE.
July 24, 2004 Second DP branch opened at New Delhi by ISE.
September 3, 2004 Third DP branch opened at Kolkata by ISE.
December 27, 2004 Trading in the BSE equities segment started by ISS.
September 15, 2005 Approval of ISE’s Corporatisation and Demutualisation Scheme by SEBI.
October 20, 2005 Switchover to Direct Client Dealing commences in ISS.
November 24, 2005 ISE re-registered as a “for profit” company, limited by shares.
November 24, 2005 Board of ISE reconstituted in tune with the Corporatisation and Demutualisation provisions.
July 28, 2007 ISE declared a dividend of 400% to its shareholders for the first time since its incorporation.
September 13, 2007 ISE was notified by SEBI as a “Demutualised Exchange”.
January 30, 2008 Restructuring of Board of ISE in accordance with the Corporatisation and Demutualisation Scheme, 2005.
March 4, 2010 ISE awarded the contract to TCS for reviving its Trading Platform.
Vashi
Vashi is an upmarket residential as well as commercial township in the city of Navi Mumbai. It is a premier city in Navi Mumbai and was one of the first "nodes" developed by CIDCO.-Populace:...
, Mumbai
Mumbai
Mumbai , formerly known as Bombay in English, is the capital of the Indian state of Maharashtra. It is the most populous city in India, and the fourth most populous city in the world, with a total metropolitan area population of approximately 20.5 million...
. It is a national-level stock exchange
Stock exchange
A stock exchange is an entity that provides services for stock brokers and traders to trade stocks, bonds, and other securities. Stock exchanges also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and...
, providing trading, clearing
Clearing
Clearing may refer to:* Glade , a tract of land with few or no trees in the middle of a wooded area* Deforestation, the clearing away of trees to make farmland* Clearing , the process of settling a transaction after committing to it...
, settlement
Settlement
Settlement may refer to:*Consolidation , a process by which soils decrease in volume*Human settlement, a community where people live**Israeli settlement, communities inhabited by Israeli Jews in territory that came under Israel's control as a result of the 1967 Six-Day War**Urban settlement **Rural...
, risk management
Risk management
Risk management is the identification, assessment, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events or to maximize the realization of opportunities...
and surveillance support to its trading members. It has 841 trading members, who are located in 18 cities. These intermediaries are administratively supported through the regional offices at Delhi
Delhi
Delhi , officially National Capital Territory of Delhi , is the largest metropolis by area and the second-largest by population in India, next to Mumbai. It is the eighth largest metropolis in the world by population with 16,753,265 inhabitants in the Territory at the 2011 Census...
, Kolkata
Kolkata
Kolkata , formerly known as Calcutta, is the capital of the Indian state of West Bengal. Located on the east bank of the Hooghly River, it was the commercial capital of East India...
, Patna
Patna
Paṭnā , is the capital of the Indian state of Bihar and the second largest city in Eastern India . Patna is one of the oldest continuously inhabited places in the world...
, Ahmedabad
Ahmedabad
Ahmedabad also known as Karnavati is the largest city in Gujarat, India. It is the former capital of Gujarat and is also the judicial capital of Gujarat as the Gujarat High Court has its seat in Ahmedabad...
, Coimbatore
Coimbatore
Coimbatore , also known as Kovai , is the second largest city in the Indian state of Tamil Nadu. It is a major commercial centre in Tamil Nadu and is known as the "Manchester of South India"....
and Nagpur
Nagpur
Nāgpur is a city and winter capital of the state of Maharashtra, the largest city in central India and third largest city in Maharashtra after Mumbai and Pune...
, besides Mumbai
Mumbai
Mumbai , formerly known as Bombay in English, is the capital of the Indian state of Maharashtra. It is the most populous city in India, and the fourth most populous city in the world, with a total metropolitan area population of approximately 20.5 million...
.
The ISE is promoted by 12 regional stock exchanges namely at Bangalore
Bangalore
Bengaluru , formerly called Bengaluru is the capital of the Indian state of Karnataka. Bangalore is nicknamed the Garden City and was once called a pensioner's paradise. Located on the Deccan Plateau in the south-eastern part of Karnataka, Bangalore is India's third most populous city and...
, Bhubaneshwar, Chennai
Chennai
Chennai , formerly known as Madras or Madarasapatinam , is the capital city of the Indian state of Tamil Nadu, located on the Coromandel Coast off the Bay of Bengal. Chennai is the fourth most populous metropolitan area and the sixth most populous city in India...
, Cochin, Coimbatore
Coimbatore
Coimbatore , also known as Kovai , is the second largest city in the Indian state of Tamil Nadu. It is a major commercial centre in Tamil Nadu and is known as the "Manchester of South India"....
, Guwahati
Guwahati
Guwahati, Pragjyotishpura in ancient Assam formerly known as Gauhati is a metropolis,the largest city of Assam in India and ancient urban area in North East India, with a population of 963,429. It is also the largest metropolitan area in north-eastern India...
, Indore
Indore
Indore is one of the major city in India, the largest city and commercial center of the state of Madhya Pradesh in central India. Indore is located 190 km west of the state capital Bhopal. According to the 2011 Indian census, Indore city has a population of 1,960,631...
, Jaipur
Jaipur
Jaipur , also popularly known as the Pink City, is the capital and largest city of the Indian state of Rajasthan. Founded on 18 November 1727 by Maharaja Sawai Jai Singh II, the ruler of Amber, the city today has a population of more than 3.1 million....
, Kanpur, Mangalore
Mangalore
Mangalore is the chief port city of the Indian state of Karnataka. It is located about west of the state capital, Bangalore. Mangalore lies between the Arabian Sea and the Western Ghat mountain ranges, and is the administrative headquarters of the Dakshina Kannada district in south western...
, Magadh and Vadodara
Vadodara
Vadodara formerly known as Baroda is the third most populated city in the Indian State of Gujarat . It is one of the four cities with the population of over 1 million...
. The participating exchanges of ISE have 4,500 members and listed securities. It is a stock exchange of stock exchanges, members of the stock exchanges being traders on the ISE.
History
Establishment of National Stock Exchange of IndiaNational Stock Exchange of India
The National Stock Exchange is a stock exchange located at Mumbai, Maharashtra, India. It is the 9th largest stock exchange in the world by market capitalization and largest in India by daily turnover and number of trades, for both equities and derivative trading. NSE has a market capitalization...
Ltd., (NSE) in 1994 with an all-India spread and expansion of operations of Bombay Stock Exchange
Bombay Stock Exchange
The Bombay Stock Exchange is a stock exchange located on Dalal Street, Mumbai and is the oldest stock exchange in Asia. The equity market capitalization of the companies listed on the BSE was 1.63 trillion as of December 2010, making it the 4th largest stock exchange in Asia and the 8th largest...
(BSE) throughout the country, both of which have their trader work stations at over 400 centres in the country today, have led to the virtual extinction of all the 19 Regional Stock Exchange (RSEs) spread across the length and breadth of the country.
The share of 19 RSEs, which was as much as 45.6 per cent of the total all-India turnover of Rs. 2.39 lakh crore in 1995-96, declined progressively year after year and in 2001-02, it was just 8.4 per cent of the total volume of Rs. 8.96 lakh crore. At present, there is virtually no trading at any of the RSEs. Trading in the cash segment is thus confined to NSE
NSE
NSE may refer to:education* Norwegian School of Economicsstock exchanges* Nagoya Stock Exchange in Japan, * Nairobi Stock Exchange in Kenya, * Nigerian Stock Exchange in Lagos, Nigeria * National Stock Exchange of India,...
and BSE
BSE
- Medicine :* Bovine spongiform encephalopathy, a neurological disease commonly known as "mad cow disease"* Breast self-examination* Bone surface element- State Secondary Education Boards of India :*Board of Secondary Education, Assam...
only, with the share of the latter, which used to account for over 70 percent of the all-India volume of trading till 1995, is also progressively declining. Currently, BSE accounts for about 30 per cent of the aggregate volume of trading on NSE and BSE in the cash segment. In the derivatives segment, while NSE clocks in about Rs. 2000 crore daily, the turnover on BSE has been progressively declining virtually to the zero level. The RSEs of the country and their members had spent over Rs. 200 crore in automating their trading, clearing and settlement systems, largely driven by regulatory compulsions, sadly to witness them lying idle at present.
Causes of decline of the Regional Stock Exchanges
Abolition of Badla with effect from July 2, 2001, acted as the backbone of trading at the Calcutta, Delhi, AhmedabadAhmedabad
Ahmedabad also known as Karnavati is the largest city in Gujarat, India. It is the former capital of Gujarat and is also the judicial capital of Gujarat as the Gujarat High Court has its seat in Ahmedabad...
and Ludhiana Stock Exchange Association
Ludhiana Stock Exchange Association
Ludhiana Stock Exchange Association Limited was established in the year 1983. By 1999-2000, the exchange had a total of 284 brokers, out of which 79 were corporate brokers. Among 284 brokers, it was further classified as 212 proprietor broker, 2 partnership broker and 70 corporate broker...
and also at a few other exchanges, which conducted Badla trading but in a clandestine manner, dealt a serious blow to trading at the RSEs. Introduction of uniform trading cycles at all the stock exchange, also effective from July 2, 2001, reduced further the volume of trading at the RSEs due to diminished opportunities for arbitrage transactions. Introduction of compulsory rolling settlements, initially in a few securities and subsequently in all securities effective from December 31, 2001 on a T+5 bases accelerated the reduction in turnover at the RSEs.
The switch over of the rolling settlement to T+3 effective from April 1, 2002 and to T+2 with effect from April 1, 2003 sealed the fate of the RSEs.
Yet another major reason for the absence of trading at the RSEs is that all the major operators are all these exchanges acquired memberships of either NSE or BSE or of both, while most others acquired the sub-brokerships of members of NSE/BSE and all of them switched over their operations completely to NSE and BSE.
In spite of the fact that trading at the RSEs has ground to a halt, RSEs have managed to survive so far because of the annual listing fees that are being received from the listed companies.
The circulars issued by the Ministry of Finance on April 23, 2003 withdrawing its earlier circulars which required all companies including existing listed companies, to be listed on the stock exchanges located in the State where the registered office or the main works/fixed assets of the company are situated, has led to the conclusion of RSEs as companies have started lining up one after the other to get themselves delisted from the RSEs.
Establishment of Inter-connected Stock Exchange
It was the dwindling fortunes of RSEs that brought them together to establish the Inter-connected Stock Exchange of India Ltd. (ISE). At a meeting of the Federation of Indian Stock Exchanges held in October 1996, a Steering Committee was formed to evolve an Inter-Connected Market System. As a result, ISE, which was promoted by 14 regional stock exchanges of the country (excluding Calcutta, Delhi, Ahmedabad, Ludhiana and Pune Stock ExchangePune Stock Exchange
- External links :**...
, apart from NSE, BSE and OTCEI) was incorporated on ISE by SEBI under the Securities Contracts (Regulations) Act, 1956 on November 18, 1998, ISE commenced trading on February 26, 1999.
ISE was launched with an objective of converting small, fragmented and illiquid markets into large, liquid national-level markets. This was a unique experiment, with a highly automated trading, clearing and settlement systems backed by state-of-the-art computers. ISE is also a professionally managed stock exchange
Stock exchange
A stock exchange is an entity that provides services for stock brokers and traders to trade stocks, bonds, and other securities. Stock exchanges also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and...
with the Chairman of the Exchange being also a Public Representative Director from its inception. Unfortunately for the RSEs, particularly small brokers, the ISE experiment did not succeed. The daily turnover, which used to be Rs. 1 to 2 crore in the first six months, gradually declined to virtually zero level. Failure of ISE was, due to the bigger brokers of the participating RSEs failing to support any interest in trading on ISE due to commercial considerations. As a result, it becomes virtually impossible for ISE to create any worthwhile liquidity in its markets in competition with the breadth and depth of NSE and BSE. Markers continued to be fragmented as the participating RSEs did not close down their regional segments. All the while the small fragmented and illiquid market failed to emerge. ISE has also not succeeded in getting companies listed on it despite the stipulation by SEBI that the State of Maharashtra constituted the regional area for ISE due to lack of regulatory support for making it applicable to over 3,000 already listed companies in the State of Maharashtra.
Mission
ISE shall endeavor to provide flexible and cost-effective access to multiple markets to its intermediaries across the country using the latest technology.Core Team
| Name | Designation |
|---|---|
| Mr. K. Rajendran Nair | Chairman, Public Interest Director |
| Mr. A. K. Mago | Public Interest Director |
| Mr. H. C. Parekh | Public Interest Director |
| Mr. K. V. Thomas | Shareholder Director |
| Mr. Santosh Muchhal | Shareholder Director |
| Mr. Bharat M. Meisheri | Shareholder Director |
| Mr. Debaraj Biswal | Shareholder Director |
| Mr. Dharmendra B. Mehta | Shareholder Director |
| Mr. P. Sivakumar | Shareholder Director |
| Mr. Surendra Holani | Trading Member Director |
| Mr. Ranjan Kumar | Trading Member Director |
| Shri P. J. Mathew - Managing Director |
Timeline
July 6, 1996 A report on Inter-connected Market System (ICMS) submitted to the Federation of Indian Stock Exchange (FISE).October 26, 1996 Steering Committee was constituted by FISE at Hyderabad.
January 4, 1997 Pricewater House Coopers,the management consultancy firm, submitted a feasibility report and recommended the establishment of ICMS.
January 22, 1998 ISE incorporated as a company limited by guarantee.
November 18, 1998 SEBI grants recognition to ISE.
February 26, 1999 Commencement of trading on ISE.
December 31, 1999 Induction of 450 Dealers commences.
January 18, 2000 Incorporation of ISS as a company limited by share capital.
February 24, 2000 SEBI registers ISS for the Capital Market segment of NSE.
May 3, 2000 Commencement of trading by ISS in the Capital Market segment of NSE.
January 10 , 2001 Turnover in the Capital Market segment of NSE crosses Rs. 1000 million per day.
February 28, 2001 Turnover of Rs. 1508.80 million recorded by ISS in the Capital Market segment of NSE.
May 4, 2001 Internet trading for clients started by ISS for the NSE segment through DotEx Plaza.
May 19, 2001 ISE’s website, www.iseindia.com, launched.
February 13, 2002 SEBI registers ISS for the Futures & Options segment of NSE.
May 6, 2002 ISS commences trading in the Futures & Options segment of NSE.
March 12, 2003 ISS admitted as a member of the Equities segment of BSE.
April 1, 2003 DP services through CDSL launched by ISE.
June 21, 2003 First Investor Education Program under the Securities Market Awareness Campaign (SMAC) of SEBI conducted at Vashi.
January 9, 2004 Peak turnover of Rs. 3034.90 million recorded by ISS in the Capital Market segment of NSE.
May 17, 2004 First DP branch office opened at Coimbatore by ISE.
July 17, 2004 First Investor Point opened at the Vashi Railway Station Complex by ISE.
July 24, 2004 Second DP branch opened at New Delhi by ISE.
September 3, 2004 Third DP branch opened at Kolkata by ISE.
December 27, 2004 Trading in the BSE equities segment started by ISS.
September 15, 2005 Approval of ISE’s Corporatisation and Demutualisation Scheme by SEBI.
October 20, 2005 Switchover to Direct Client Dealing commences in ISS.
November 24, 2005 ISE re-registered as a “for profit” company, limited by shares.
November 24, 2005 Board of ISE reconstituted in tune with the Corporatisation and Demutualisation provisions.
July 28, 2007 ISE declared a dividend of 400% to its shareholders for the first time since its incorporation.
September 13, 2007 ISE was notified by SEBI as a “Demutualised Exchange”.
January 30, 2008 Restructuring of Board of ISE in accordance with the Corporatisation and Demutualisation Scheme, 2005.
March 4, 2010 ISE awarded the contract to TCS for reviving its Trading Platform.
Membership
A registered Member is entitled to execute trades and to clear and settle trades executed on his own account as well as on account of his clients in the Capital Markets Segment. Membership of the Exchange is open to corporate entities, individuals and partnership firms who fulfill the eligibility criteria laid down by SEBI and ISEDepository services
Inter-connected Stock Exchange is a Depository Participant of Central Depository Service (India) Limited (CDSL) and National Securities Depository Limited (NSDL). ISE-DP has branches at Delhi, Kolkata, Patna, Guwahati, Ahmedabad, Hyderabad, Nagpur, Coimbatore, Tirunelveli and 155 Collection Centers across the country. Following depository services of CDSL are provided to the individual and corporate investors by ISE-DP.- Dematerialisation (Demat)
- Rematerialisation (Remat)
- Pledge of Demat securities
- Electronic Access to Securities Information & Execution of Secured Transactions (easiest)
- Settlement of securities in Demat Mode
- Electronic Access to Securities Information (easi)