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CSE may end all deferrals by July 2

Aniek Paul

The Calcutta Stock Exchange may ask its members to liquidate all deferred positions by July 2, as the exchange does not have the required infrastructure to accommodate deferred positions after the cut-off date.

The Securities and Exchange Board of India is set to mandate that carried forward will be allowed only through Automated Lending and Borrowing Mechanism in rolling segment after July 2.

Sebi full-time board member Jayanth R Varma said, "After badla is banned with effect from July 2, deferred positions that can be legitimately carried forward till September 3, can be carried forward during the interim period only through ALBM in rolling segment."

CSE executive director Tapas Datta said, "The exchange does not have any carry forward mechanism for its rolling segment, and developing an ALBM platform for the rolling segment would cost us about Rs 250,000. Besides, there is not enough time perhaps to develop the platform."

Though no final decision has been taken by the bourse as yet, indications are the exchange may ask its members to liquidate all open positions by July 2. Datta said, "The exchange would come up with clear guidelines by early next week."

The Securities and Exchange Board of India has mandated that all deferred positions till May 15 can be carried forward till September 3, while outstanding positions taken after May 15 must be liquidated by July 2. But no fresh outstanding positions can be taken between July 2 and September 3.

Varma said: "We would soon be issuing a circular to the exchanges, clarifying the point. The stock exchanges would have to adopt the ALBM in the rolling segment for the period between July 2 and September 3 to accommodate deferred positions."

For the cash-strapped CSE this is bad news. But there may be more bad news in store for it as Sebi may not allow exchanges like CSE to start their own derivatives segment. Top-level sources in Sebi said, the market watchdog would consider the issue in its new board meetings on derivatives.

CSE is not much keen on developing its own derivatives platform either, and the exchange officials have started negotiating with larger exchanges for membership of at least the derivative segment through the subsidiary route.

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