Calcutta Stock Exchange To Mark Its Final Diwali: Why Is It Closing Down?
CSE began to lose ground, particularly after the Dot Com boom in the early 2000s, when the stock exchange struggled to transition to a technology-driven world of finance.
The Calcutta Stock Exchange, one of India's oldest bourses, is set to celebrate its final Kali Puja and Diwali as a functioning stock exchange on Oct. 20, before indefinitely shutting shop.
This will mark an end to a 117-year-old chapter for the CSE, which has faced countless regulatory challenges, dwindling trade volumes, and legal battles over the years.
Trading at the CSE had already been suspended since 2013 after the market regulator, Securities and Exchange Board of India (SEBI), halted operations over non-compliance with regulatory norms.
While there have been efforts in the past decade to revive trading and even appeal against SEBI's decision, the exchange has now opted to shut its shop for good.
Why Is CSE Shutting Down?
CSE’s biggest blow came in 2013 when SEBI decided to suspend trading in the exchange. SEBI’s decision came on the back of the exchange’s supposed failure to comply with key regulations.
The exchange tried numerous times to challenge the suspension in court. But this led to financial strain, while shrinking trading activity did not make things easier either, especially amid the boom in trading witnessed by the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
In fact, the domination of BSE and NSE serves as a key reason behind CSE's downfall, coupled with other factors, including an effective loss of relevance.
CSE began to lose ground, particularly after the Dot Com boom in the early 2000s, when the stock exchange struggled to transition to a technology-driven world of finance.
The final blow came in 2001 when the Ketan Parekh scam came to light. A stockbroker by trade, Parekh utilised loopholes in CSE to inflate the prices of select stocks, known as K-10 stocks.
The Ketan Parekh scam significantly dwindled investor confidence and tighter regulation. Over time, the stock exchange's inability to comply with the regulations eventually led to the downfall of CSE.
