When the BJP government in West Bengal presented its first budget in June, there was mention of reviving Calcutta Stock Exchange (CSE). It has had a glorious past, but there is no trading since 2013. Its resurgence could be an uphill battle due to conditions placed by the Securities and Exchange Board (SEBI).

Speaking at an event by Bharat Chamber of Commerce in Kolkata and later to the media, SEBI Chairman Tuhin Kanta Pandey spoke about various aspects that need to be factored in before CSE gets the go-ahead to be functional.

Among the many requirements, the 10 most important include:

  1. Net worth: The exchange must have a minimum net worth of ₹100 crore.
  2. Annual turnover: It must achieve an average annual turnover of ₹1,000 crore to continue operating as a stock exchange.
  3. Trading infrastructure: It must have the necessary infrastructure for the orderly execution of trades.
  4. Online trading system: It must establish an online, screen-based trading system.
  5. Surveillance mechanism: It must have online surveillance capabilities to monitor trading activities.
  6. Cybersecurity: It must have adequate cybersecurity controls and comply with SEBI's cybersecurity and cyber-resilience framework.
  7. Listing infrastructure: It must have the infrastructure required to facilitate the listing and trading of securities on its platform.
  8. Nationwide network: It must establish a nationwide network of trading members with adequate facilities to admit and regulate its members.
  9. Outstanding dues: It must settle all outstanding dues payable to brokers and other stakeholders.
  10. Clearing corporation: It must establish a separate clearing corporation or enter into an arrangement with an existing clearing corporation for the settlement of trades.

“Today, these systems are extremely technology-intensive. Significant investment is required in technology, particularly considering the risks associated with artificial intelligence and cybersecurity. An exchange must also establish an online surveillance system capable of properly monitoring trading activities. Therefore, any investment of this scale can only be recovered through a viable business plan if there is sufficient trading turnover,” said Tuhin Kanta Pandey.

The turnover also depends on traders being willing to participate in the exchange as traders look for liquidity. If there is insufficient liquidity, the impact cost of executing trades becomes very high, creating a catch-22 situation.

“It is difficult for location-based exchanges to operate in this environment because geographical location has become much less relevant today. Everything is electronically connected. Trading is no longer restricted to a particular geographical area, and investors can participate from outside the country as well. New technologies have therefore made the geographical location of an exchange much less important than it was when physical trading used to take place,” added Pandey while not ruling out the revival of CSE.

The SEBI chairman goes on to explain that since there has been no trading since 2013, a considerable amount of time has already passed. Subsequently, court orders came in 2024 and the exchange submitted an exit plan in 2025. There is also the issue of the exchange's land. “SEBI granted certain permissions to enable the exchange to sell the land and keep the proceeds in an escrow account. The money has to be used to clear outstanding dues payable to brokers and other stakeholders. Until all these dues are cleared, the exchange cannot move forward. It is mandatory for the exchange to settle its outstanding liabilities.”

After clearing these roadblocks, CSE will decide the next course of action as regulatory framework and requirements already exist. An exchange wishing to operate can approach the regulator after requisite conditions are met. However, establishing an electronic stock exchange in current times adds another dimension to resurgence with the internet, trading apps and Artificial Intelligence (AI) playing an important role.

CSE was established in 1908, being one of the oldest stock exchanges in Asia. SEBI had asked CSE to exit, though the matter is currently pending in Calcutta High Court. Under SEBI’s exit policy, 13 regional stock exchanges have closed including Bangalore Stock Exchange, Hyderabad Stock Exchange and Madras Stock Exchange. With the decline of trading at regional stock exchanges, CSE has a tough road ahead before it can add to Bengal’s foreseen resurgence story as the government looks to also transform the economy of the state by ushering in big ticket investments.

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