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CSE unofficial market under Sebi watch

Janaki Krishnan

The Securities and Exchange Board of India (Sebi), as a direct corollary to the current stock market imbroglio, has decided to tackle the unofficial market which exists on the Calcutta Stock Exchange (CSE).

According to sources, Sebi has already started some preliminary spadework in the unofficial market which even surpasses the official market payment liabilities of the Calcutta Stock Exchange members. The unoffical market has contributed in a large part to the current crisis in the exchange, they added.

Sebi sources made it clear that cleaning up the regional exchanges would be the next most important step in the regulator's agenda for action.

Senior Sebi executive director, L K Singhvi, said the market regulator's first priority was to ensure that the current payments crisis is settled before undertaking any further investigations.

While expressing concern over the happenings on the CSE, Singhvi said the disciplinary actions being taken by the bourse against erring brokers would ensure damage control to a large extent.

Sources said that while the payments problems in the unofficial market had impacted the official obligations of the brokers, the problem had arisen in the first place due to a Mumbai-based broker having short sold heavily.

The unofficial market in the Calcutta Stock Exchange- known to all regulatory authorities including Sebi - has been allowed to proliferate to such an extent that it has now assumed gigantic proportions.

Sources said that, considering the volume of transactions which take place unofficially, the crisis was waiting to happen.

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