The formation of the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE), no doubt changed the way stock exchanges were functioning in India. By adopting the advanced technologies, transparency in shares trading, and proper corporate governance, both the stock exchanges (BSE and NSE) started to function all across India. This was indeed a very positive step but it also led to the significant bearing on the way small and regional stock exchanges functioned in the country. This led to the formation of the Inter-Connected Stock Exchange (ISE) in India.
What is Inter-Connected Stock Exchange of India?
The Inter-Connected Stock Exchange (ISE) is essentially a national level stock exchange that started its operations in the year 1998 in Vashi, Mumbai. ISE is promoted by the 15 regional stock exchanges with a main objective increasing the liquidity of the shares listed on them. This will help many smaller stock exchanges in various parts of India that are not performing great will get an access to the national market.
The primary function of the ISE is to offer the much needed support to its trading members in the form of trading, clearing, settlement, risk management and surveillance. It has around 841 trading members, located in 18 cities. The members are actively supported through the regional offices, which have been set up in various parts of India like Delhi, Kolkata, Patna, Ahmedabad, Coimbatore, Nagpur and Mumbai.
The 15 regional stock exchanges that are the participants of ISE are Bangalore, Bhubaneswar, Chennai (Madras), Cochin, Coimbatore, Guwahati, Hyderabad, Jaipur, Ludhiana, Indore (Madhya Pradesh), Patna (Magadh), Mangalore, Saurashtra (Kutch), Kanpur (Uttar Pradesh) and Vadodara.
Features of Inter-Connected Stock Exchange
The prominent features of the ISE are as follows:
- The listing fee of the ISE is not on a very higher side. A small or medium sized company to get listed in the ISE must have a paid-up capital of around Rs. 3 crore to Rs. 5 crore.
- The trading members of the ISE can access the NSE through the ISE Securities and Services Limited (ISS).
- There is a separate investor grievance and service cell where the investors located in the various parts of the country can lodge a complaint and get a feasible solution.
Objectives of Inter-Connected Stock Exchange
The prominent objective behind setting up of the ISE is to provide the cost-effective access to the NSE and BSE to its trading members, using the advanced technology, all across the country. Besides this, the other main objectives of the ISE are as follows:
- Integrate smaller regional stock exchanges across the country so that they can get a hassle-free access to the multiple markets and provide the cost-effective solutions to the investors.
- Offer the clearing and settlement facilities to the trading members.
- Provide a better risk management system to safeguard the interest of the investors.
- Increase the usage of the demat trading in the country.
- Provide a separate clearing house for the purpose of settling the trades at the BSE or NSE.
How to Trade in Inter-Connected Stock Exchange?
A member who is registered to carry out trade in the ISE is allowed to execute trading, clear and settle the trade from his or her account. Furthermore, the individual is also provided the rights to settle and clear the trading on his account of other members or clients, mainly in the capital market segment. The corporate entities, partnership firms and individuals can become the member of the ISE provided they fulfill the eligibility criteria set up by the Securities and Exchange Board of India (SEBI) and ISE.
Inter-Connected Stock Exchange is a depository participant of the Central Depository Service (India) Limited (CDSL) and National Securities Depository Limited (NSDL). The depository participants of the ISE are located in various parts of India like Delhi, Kolkata, Patna, Guwahati, Ahmedabad, Hyderabad, Nagpur, Coimbatore and so on. The depository services provided to the investors are as follows:
- Dematerialization (Demat)
- Rematerialization (Remat)
- Pledging of securities
- Electronic Access to Securities Information and Execution of Secured Transactions (EASIEST)
- Settlement of securities in demat mode
- Electronic Access to Securities Information (EASI)
It is crystal-clear that ISE is basically a blessing in disguise for the small regional stock exchanges. The prominent advantage that the companies get by listing their securities in the ISE is they are identified as the technology savvy and investor-friendly.