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OTCEI takes position for leap into New Millennium

Keeping in mind the phenomenal growth in knowledge industry in the country, the Over the Counter Exchange of India has announced new initiatives to emerge as one of the leading exchange of infotech companies in the new millennium.

P S Subramanyam, chairman of the Unit Trust of India, who is also the chairman of OTC Exchange, announced new initiatives today including the introduction of new threshold requirements for initial public offerings seeking listings on the exchange and the creation of an unlisted securities segment with Internet-based trading.

The exchange will admit the unlisted IPOs for trading at the OTCEI, companies having minimum capital of Rs 50 million and a 1000 minimum shareholders are eligible for trading on the OTC's unlisted segment.

The Web-based business model for unlisted securities planned by the OTCEI will be the first of its kind in India, Subramanyam said.

While announcing the new plans, Subramanyam said, these are designed to ensure that it emerges as the stock market of choice in the country for sectors like information technology, pharmaceutical, biotech, and media and service, where intellectual capital assumes greater significance than physical capital assets.

Subramanyam has expressed confidence that with this, the exchange will now be the premier exchange for technology and growth stocks in India and is poised to emerge as the key mover behind these industries.

The new initiatives came close on the heels of a move last month by the OTCEI to form a subsidiary which would seek membership on the NSE, enabling its members gain access as sub-brokers to the latter's order book. This is expected to bring out reaction from OTCEI brokers in the capital market. The subsidiary is expected to take membership on the NSE about three months time.

The OTC had announced last month, a complete revamp of the exchange's market making rules to create greater liquidity for stocks listed on the exchange to provide better exit opportunities for the investors at all stages.

According to OTC officials, the new market making system will be operational by the fourth week of October and will be integrated with the existing oasis system.

Subramanyam said: ''All these steps are a part of a drive towards more investor friendly measures, designed to make OTCEI the ideal exchange for the new intellectual capital-led first generation entrepreneur, who requires constant capital infusion, especially in the initial years of operation. The OTCEI will concentrate on technology-led segments, such as it enabled services, which will see tremendous growth in India.''

The OTCEI's new initiatives were based on two sets of recommendations received by the exchange. The OTCEI set up an informal group to formulate guidelines for trading in unlisted securities and had also constituted a standing committee to define and explore alternatives for developing prudent listing norms for companies' IPOs seeking listing on the exchange.

The IPO committee was headed by Pradeep Kar, chairman, Microland group.

The new norms recommended by the committee were including new threshold listing requirments for IPOs seeking listing on the OTC, an arrangement with the NSE for parallel trading of OTC, the appointment of a panel of chartered accountant and audit firms to undertake a due diligence exercise of companies seeking listing on the exchange and the constitution of a separate committee for screening companies prior to listing.

Joseph H Bosco, OTC managing director, said the initiatives were aimed at supporting this growth and, alongside, offering the venture capital and private equity fund market a major boost. ''Our new initiatives will create the ideal mechanisms for an attractive exit route for venture capital, private equity funds, high networth individuals and angel investors.''

Bosco said that the introduction of the unlisted securities trading segment will introduce transparency and establish mechanisms for trading in unlisted securities and could be the ideal benchmark for potential IPOs.

NSE Managing Director R H Patil announced fullest cooperation for the OTC Exchange and said that being a subsidiary of the NSE, the traders at the OTC will have a direct access to the NSE for trading, certainly boosting the growth of the OTC in the near future.

UNI

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