Kolkata

The revival of the century-old Calcutta Stock Exchange will depend on its ability to attract sufficient trading volumes, build a sustainable business model and make substantial investments in technology, SEBI chairman Tuhin Kanta Pandey said here on Saturday.

Responding to a question on the West Bengal government's proposal to revive the exchange, Pandey said the existing regulatory framework did not rule out the possibility of setting up new stock exchanges, but any such proposal would have to meet prescribed governance and capital requirements.

He, however, cautioned that the market landscape has changed significantly since the days when regional stock exchanges operated across the country, with electronic trading now allowing investors to access markets from anywhere.

"Having an exchange is one thing. But whether you would be able to really make it feasible is another," Pandey said.

He said liquidity would be a critical consideration for any new exchange, and its promoters would need to demonstrate that enough clients would trade on the platform to sustain its operations.

The SEBI chief also stressed that exchanges would require heavy and continuing investments in technology, with requirements expected to increase manifold as they deal with emerging risks, including those arising from artificial intelligence.

Pandey also questioned whether geographical proximity, which was once an important factor for regional exchanges, would remain relevant in an era of electronic trading.

The Calcutta Stock Exchange had sought a hold on its exit application in July after the West Bengal government announced its intention to revive the institution in the state budget.

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Pandey's remarks underline that while regulatory provisions allow the possibility of a new exchange, its commercial viability and ability to compete in a market dominated by the NSE and BSE would be crucial.

Trading at CSE has been suspended since April 2013 due to regulatory compliance issues.