The formation of NSE changed the way in which the stock exchanges were functioning. Modern infrastructure, technology, transparency and corporate governance are now becoming the features in the corporate the world. It also forced BSE to adopt the new technology and with this, NSE and BSE crossed boundaries and started functioning, operating throughout India. This affected the functioning of small and regional exchanges. This led to the birth of the Inter-connected Stock Exchange of India Ltd. (ISE). Federation of Indian stock exchanges, in a meeting held in 1996, constituted a steering committee to evolve an interconnected market system. In 1997, the market governing body of India, Securities and Exchange Board of India (SEBI) granted approval to the proposal of the ISE to set up a national level stock exchange promoted by 14 regional stock exchanges. ISE was launched with an objective of converting small, fragmented and illiquid markets into a large, efficient and liquid market. Inter-Connected Stock Exchange (ISE) has set up an Inter-connected Market System (ICMS) which provides its trading members a facility to trade on the national market in addition to the trading facility at the regional stock exchanges. The trading members of the ISE, who are already the members of the 14 stock exchanges (which are the constituents of the ISE), satisfy the capital adequacy requirements of the ISE separately and in addition to the capital adequacy requirements of the regional stock exchange. The ISE has set up a separate clearing house for settlement of the trades at the national market. The ISE has also made arrangement to appoint a clearing bank for on-line transfer of funds from regional centers to national center. The ISE has an adequate risk management system for safety, integrity of the market and also to protect the interest of the investors. The participating exchanges of ISE have about 4,500 members and a large number of listed securities. It is a stock exchange of stock exchanges, members of the stock exchanges being traders on the ISE. The ISE has provided a highly automated trading system to the traders of the participating regional stock exchanges with direct access to the national level trading platform on an equal footing regardless of the location of the particular stock exchanges.
Important Features of Inter-Connected Stock Exchange of India
There are some of the features which make ISE a new age stock exchange are as follows:
- ISE is a national level recognized stock exchange having moderate listing fees and granting listing and trading permission to small and medium sized companies having a post public issue paid-up capital of Rs. 3 crore to Rs. 5 crore (subject to the appointment of market makers), besides companies with a capital of above Rs. 5 crore.
- All traders and dealers of ISE have access to NSE through ISE securities and Services Ltd. (ISS), which ensures the continuous attention of investors.
- ICSE has set up an ‘Investor Grievance and Service Cell’ which looks after all types of complaints of investors located across the country and provides decentralized support.
- Listing of stocks with ISE would give the company an advantage of being identified as a technology-savvy and investor-friendly company.