OTCEI should follow Nasdaq route

MUMBAI, MAR 15: The Over the Counter Exchange of India (OTCEI) should reposition itself on the lines of Nasdaq of the US in order to give ...

MUMBAI, MAR 15: The Over the Counter Exchange of India (OTCEI) should reposition itself on the lines of Nasdaq of the US in order to give a route to knowledge-based and software companies to raise cheap funds and get a proper listing and valuation, said National Stock Exchnage (NSE) Managing Director R H Patil.

Patil, who inaugurated broking operations of OTCEI here today, said even Nasdaq began as a small exchange, inviting knowledge-based companies which were having difficulty in raising funds for expansion. “There are many promoters who do not want to share their ideas with venture capitalists… thus OTCEI can come to these companies’ rescue as Sebi has also waived the three-year profit making clause for Otcei listing,” he said.

Patil said the present trend in unification of fragmented stock markets in India was in line with the global trends, particularly of the US.

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NSE turnover would witness a growth of over 50 per cent in value of trade per day during the year with many smaller exchanges taking its membership, he said. In fact, with the launch of OTCEI’s subsidiary OTCEI Securities Ltd, all brokers of OTCEI will become NSE brokers as OSL will provide its dealers access to the liquid order book of NSEIL and trade in demat shares.

The technology-driven move would lead to more liquidity imparting ease of dealings for buyers and seller, Patil added. In fact, NSE’s infotech subsidiary, NSE.IT is also toying with the idea to list itself in Nasdaq, he said.

Managing Director of OTCEI and OSL, Joseph Bosco, said OSL had tied up with three internet service providers (ISPs) — BPL Innovision Pvt Ltd, Satyam Infoway Ltd and Global Electronic Commerce Services Ltd — to provide a back-up link to the network.

OSL order routing system had all the features of NSE trading system as regards risk management and market surveillance activities providing total control on the activities of sub-brokers/ dealers, he added.

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“OSL will only complement the activity of OTCEI. At one stroke OTCEI brokers will gain double benefits through access to nse’s liquid order book, while retaining their access to some of India’s key technology and growth stocks,” he said.

UTI chairman PS Subramanyam has set a target for the OSL to attain 10 per cent level of trading and volume of the NSE in due course, which would amount to Rs 500 crore of turnover per day with over 50,000 trades. OTCEI would focus on opportunities arising out of growth of IT industry in the country as projected by IT trade body Nasscom, he added.

OSL Chairman S Venkatraman said the new dealers can access the system with an initial capital of Rs five lakh, which is scalable according to the trade exposure requirements of the dealer. The dealers would be allowed a net exposure of 7.9 times the base capital, he added. The cost of transation for be 0.04 per cent of traded value and for transactions that results in delay, the cost would be 0.075 per cent. These charges include NSE’s turnover fees payable by OSL and stamp duty on the contract notes.