Sebi asks CSE to rectify flaws

CALCUTTA, July 11: The Sebi representative on the Calcutta Stock Exchange board, Vijay Ranjan, today asked the Calcutta Stock Exchange autho...

CALCUTTA, July 11: The Sebi representative on the Calcutta Stock Exchange board, Vijay Ranjan, today asked the Calcutta Stock Exchange authorities to rectify deficiencies in the area of market surveillance.

The Sebi nominee also asked the exchange to gear up its surveillance function to comply with all the requirements indicated by Sebi in its inspection report.

The CSE board, which met here today, took note of the Sebi inspection report and subsequently decided to introduce a separate server and software, which would be incorporated with the existing system on a trial basis starting July 13.

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Ranjan told newsmen that the stock exchange had been asked to correct the anomalies, and had set a deadline of August 21. According to Mahesh Bajaj, vice-president of the exchange, the software had been already introduced in other exchanges like Bangalore, Delhi, and was in the process of getting installed in Mumbai.

In the surveillance inspection of the stock exchange carried out in may, the Sebi report severelycriticised the bourse, and said that information which was available through C-Star for the purpose were "grossly inadequate".

The Sebi report said the staff and personnel of the stock exchange were not equipped to understand manipulation, which is an integral part of surveillance.

The exchange also proposed to strengthen the surveillancesystem by recruiting suitable trained manpower. According to Bajaj, the CSE surveillance system would be customised as per the parameters prescribed by Sebi under its stock watch programme.

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The committee had also decided to write to Sebi seeking an expeditious clearance for CSE’s expansion plans on an all-India basis as per the existing Sebi policy.

It decided to implement a weekly settlement cycle for the specified group from August 21, 1998. With this, the roadblock to introduction of the modified carryforward system has been removed.

The CSE committee decided to reduce the settlement cycle for `A’ group to seven days so that it coincides with the `B’ group cyclebeginning on Friday latest by August 21, 1998. As a corollary, it was also decided to make a formal request to the Securities & Exchange Board of India (Sebi) for approval of its application for modified carryforward system, the trading module for which is already in place.

CSE is the only major bourse that was resisting the introduction of a weekly cycle on the plea that it would drastically reduce business volumes and kill arbitrage opportunities. Its reluctance had stalled the introduction of a modified carryforward system.