Calcutta Stock Exchange Shares Surge on Revival Hopes, But Market Skeptics Demand Major Reforms

Calcutta Stock Exchange Shares Surge on Revival Hopes, But Market Skeptics Demand Major Reforms​

The shares of the century-old Calcutta Stock Exchange (CSE), traded on unlisted platforms, have experienced a sharp rally following the announcement by the West Bengal government regarding its intent to revive the bourse. Despite this optimistic development, financial experts are remaining unconvinced about the feasibility of bringing the exchange back from dormancy and achieving meaningful market traction.

Investor Optimism Drives CSE Stock Rally​

The state government's commitment provided a significant impetus to investors, causing volatility in the unlisted shares. The CSE shares, which were quoted at around Rs 1,500 on June 21, saw a substantial appreciation by June 30, with prices reaching nearly Rs 1,800 and some trading platforms citing values close to Rs 2,000.

This rally is underpinned by the Finance Minister, Dr Swapan Dasgupta, who announced the revival of CSE in the state budget on June 22. Following this proposal, CSE officials are expected to withdraw the voluntary exit application that had been filed with the Securities and Exchange Board of India (SEBI) back in February 2025.

Formidable Regulatory and Technical Hurdles Loom Over Revival​

While the government's backing reflects optimism, market participants caution that successful revival is far more complex than regulatory approval alone. A modern stock exchange requires a sophisticated technological infrastructure, advanced surveillance systems, robust cybersecurity capabilities, and specialized manpower to function efficiently in today's capital markets.

Beyond meeting the minimum requirement of Rs 100 crore net worth, establishing secure clearing arrangements remains a critical challenge. Market experts note that previous attempts by CSE officials to secure a national clearing corporation arrangement did not materialize, pointing to this as a major barrier.

Liquidity Conundrum and the Need for Differentiation​

The biggest obstacle identified by market participants is the lack of sufficient liquidity across different price levels. Even established exchanges struggle to consistently generate trading volumes, creating a tough environment for any revived institution. Institutional investors and large brokers overwhelmingly gravitate toward exchanges that offer deep liquidity pools, making it difficult for CSE to attract significant sustained activity.

Kamlesh Shroff, National President of ANMI, stressed that the Indian capital markets are now defined by technology and liquidity focus. He advised that while the legacy of the CSE is respected, revival must be rooted in future relevance. The exchange must either create a niche in SME financing or regional entrepreneurship to contribute meaningfully to India's economic growth narrative.

Former CSE Managing Director and CEO Madhav Reddy similarly emphasized that success hinges on offering a compelling value proposition—something uniquely different and cost-effective compared to existing market players. Without clear differentiation, the prospects of successful revival remain inherently limited.

The Difficult Path of Winding Up​

Ironically, industry analysts suggest that shutting down the CSE has proved almost as complex as successfully resurrecting it. Under SEBI's 2012 exit policy, a stock exchange seeking voluntary exit must settle all claims and liabilities on behalf of its brokers before the process can conclude. These estimated statutory liabilities are believed to run into hundreds of crore rupees.

The complexity is heightened because while some regulatory dues may be waived by SEBI, statutory penalties constitute government dues that cannot be unilaterally cleared by the regulator. The struggle with exit liabilities highlights the deep-seated operational entanglement of the bourse.

CSE's History and Decline​

The Calcutta Stock Exchange, established in 1923, ceased equity trading in April 2013 after SEBI suspended operations due to non-compliance with required regulatory standards. Trading volumes steadily migrated to NSE and BSE which provided superior technology, national connectivity, and vastly higher liquidity.

As brokers and investors prioritized exchanges offering efficient price discovery and deeper markets, CSE's activity virtually dried up. Although the exchange pursued legal avenues and subsequently sought voluntary exit under SEBI’s framework, it has remained without active equity trading for over a decade.