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A public interest litigation has been filed in Gujarat High Court against the Securities and Exchange Board Of India (SEBI)'s notification, which made it mandatory for the regional stock exchanges (RSE) to have minimum net worth of Rs 100 crore and annual turnover of Rs 1000 crore.
A shareholder of Ahmedabad Stock Exchange (ASE), Kirit Bhatt, who is also chairman of Investor Protection and Education Research Centre, has filed a public interest litigation in the high court on Thursday.
Bhatt has challenged the SEBI's order, claiming it to be 'illegal'.
The matter is likely to be taken up for hearing by a division bench of chief justice Bhaskar Bhattacharya and justice JB Pardiwala next week.
Bhatt claimed that SEBI did not consult the regional stock exchanges before taking the decision. He also claimed that RSEs were not given opportunity for hearing.
In its notification issued on June 20, 2012, SEBI had announced that all the stock exchanges which do not have net worth of Rs 100 crore and annual turnover of 1000 crore, would be derecognised.
Bhatt alleged that the SEBI’s decision would severely affect the RSEs and their shareholders.
And such a decision by the regulator may even force some of the exchanges to close their operations, thereby creating a threat on their existence.
The petition noted that the logic behind fixing net worth and turnover to this tune was not disclosed by SEBI. In his petition, Bhatt claimed that the decision was taken with a malafide intention and was to benefit only the big stock exchanges like Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).
Earlier this month, promoters and members of the Uttar Pradesh Stock Exchange (UPSE) had moved Allahabad High Court against SEBI for prescribing stringent norms for RSEs. The Court has admitted a petition filed by the UP Brokers Forum.
Some of the RSEs have started exploring ways to meet the requirements. Besides ASE, Gujarat's other two regional exchanges, Vadodara Stock Exchange Limited (VSE) and Saurashtra and Kutch Stock Exchange (SKSE) are considering to merge after SEBI’s new norms announced.