Calcutta Stock Exchange
The Supreme Court has declined to intervene in the Calcutta High Court’s decision to give the Calcutta Stock Exchange (CSE), India’s oldest stock exchange, more time to comply with the Securities and Exchange Board of India’s (Sebi’s) 2012 Exit Policy.
A bench comprising Justice Abhay Oka and Justice Augustine George Masih noted that since the Calcutta Stock Exchange extension would end in February, there was no need to intervene at this stage. The court said it would review CSE’s compliance with the Exit Policy at the next hearing on 7 March 2025.
Sebi had moved the Supreme Court to appeal the extension, alleging that Calcutta Stock Exchange had become a “hub for manipulation” and failed to meet standards outlined in the Exit Policy. At the hearing, additional solicitor general N Venkataraman, representing Sebi, argued that Calcutta Stock Exchange did not deserve a further extension as it had failed to comply with the 2012 Exit Policy. He said, “We don’t want one more day. For 12 years they have not been doing business, but are becoming a hub for manipulation. That’s our fear.”
Calcutta Stock Exchange must comply with Sebi’s Exit Policy by 19 February 2025. The policy mandates stricter regulatory standards for stock exchanges, such as establishing a clearing corporation and achieving a ₹1,000 crore turnover. If CSE fails to meet these conditions, Sebi will be able to take further action, including pushing for the exchange’s closure.
In August 2024 the Calcutta High Court gave CSE six more months to comply with the policy, allowing it to either establish its own clearing corporation or partner with an existing one. This was after the court upheld the Exit Policy and the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012 in February 2024.
Sebi’s 2013 ban
Sebi banned CSE from trading on its platform in April 2013 owing to regulatory and compliance issues. Since then, CSE’s only function has been to give its members a platform to trade on the NSE.
Established in 1908, CSE was the second-largest stock exchange in India after BSE, but its fortunes began to decline after the rise of the NSE in 1994 and the banning of the ‘badla’ trading system in 2001. Scandals such as the Ketan Parekh scam in 2001 further damaged its reputation. In 2013, Sebi suspended CSE’s operations, saying it wasn’t in compliance with regulatory norms, and trading was moved to NSE under a five-year contract. However, NSE terminated its agreement with CSE in 2023, citing ongoing deficiencies in its operations, effectively halting trading on the CSE platform.
Between 2013 and 2015, several regional bourses, including those in cities such as Hyderabad, Coimbatore and Mangalore chose to exit, pushing listed companies to migrate to national exchanges such as NSE and BSE.