Broadcast 20th March 2001

	Listen to an interview with the president of the Calcutta Stock Exchange, Kamal Parekh

Trading in Bombay has been affected by concerns that the Calcutta Stock Exchange, CSE, may be in serious debt after brokers had defaulted on payments.

The problems at the bourse are believed to have started with the volatility in the Indian markets at the beginning of March.

Prices fell at a time when they should have risen, coming after an investor-friendly budget. That aroused suspicions.

The regulator, SEBI is now investigating possible market manipulation and insider trading. It has also imposed stricter trading conditions for brokers.



Some say the problems at the CSE may have been made worse though by the fact that unofficial so-called kerb trades happen there, outside normal hours and away from the eyes of the exchange.

To hide the losses experienced by some brokers, fictitious trades may have also been entered into the computer systems at the exchange.

Regulators are now posted at the bourse full time, gathering evidence.

The next potential crisis comes on Thursday, when traders have to settle the amounts they owe for recent trades.

There have even been rumours that the bourse may have offered to mortgage part of its own land to meet the losses, but the president of the Calcutta exchange, Kamal Parekh denied this:

"There is no such proposal to mortgage any building or any properties whatsoever. We have adequate resources available at our disposal and if there is any short fall we can meet it with our own internal accruals."

The stock exchange will not have to borrow any money from outside. Kamal Parekh

Mr Parekh says the exchange initiated defaulting procedures against 3 broking firms on Wednesday. The companies have been issued a show cause notice. They still have 48 hours on receipt of this notice to present a case to the governing board. If they fail to do so they can be declared defaulter.

The pay-out obligations of the Calcutta Stock Exchange will be carried out as per schedule according to Mr Parekh:

"Even if there is a marginal anticipated shortfall - which we cannot say at this moment because the paying is on Thursday - the stock exchange is fully geared to meet its pay-out obligations. It will not have to borrow any money from outside"

There are some reports that the so-called kerb trading, trading outside the normal hours of the exchange, may have helped to make the situation worse and also that there may have been some fictitious trades entered into the exchange.

Mr Parekh believes that outside trading has no bearing whatsoever. He says the exchange is more concerned with the trading that took place on its screens and will only recognise those trades which are credited on the screens.

He adds that the exchange is examining some of the brokers transactions because the authorities do believe that there could be some mutual benefit transactions. This is being done under the supervision of SEBI.

The exchange is examining some of the brokers transactions under the supervision of SEBI. Kamal Parekh