USE full-year loss widens to Rs 19 crore

The USE, which commenced operations in September 2010, ended the 2010-11 fiscal with a net loss of Rs18.76 crore. The accumulated losses have led to the USE’s net worth coming very close to the minimum requirement of Rs100 crore for a stock exchange

New Delhi: The United Stock Exchange (USE) saw its full-year losses widen to about Rs19 crore in the fiscal ended March 2011, with interest income from fixed deposits accounting for over 96% of its revenue, reports PTI.

The country’s newest stock exchange has posted revenue of Rs8.29 crore for the 2010-11 fiscal, which included about Rs7.98 crore (96.2%) as income from interest on surplus funds kept in bank fixed deposits.

The exchange, which commenced operations in September 2010, is yet to levy any transaction charges, said that it ended the 2010-11 fiscal with a net loss of Rs18.76 crore.

Together with a brought-forward loss of about Rs14.5 crore from the previous year, the aggregate loss carried to the balance sheet as on 31 March 2011, was Rs33.27 crore.

These accumulated losses have led to the USE’s net worth coming very close to the minimum requirement of Rs100 crore for a stock exchange.

As of 31 March 2011, the USE’s net worth stood at about Rs124 crore.

Rival MCX-SX, which is present only in the currency derivatives market like the USE, had a net worth of about Rs256 crore as of 31 March 2011.

The net worth of the two established exchanges, the BSE and the NSE, stood much higher at Rs2,029.14 crore and Rs2,988.40 crore, respectively, as of 31 March 2011.

As per its financials for the fiscal 2010-11, the USE’s total revenue rose from Rs1.83 crore to Rs8.29 crore, which was mainly due to interest income, as the exchange does not levy any transaction charge on trading on its platform.

The exchange said it is not levying transaction charges as part of efforts to attract and retain business volumes in its nascent stage.

TS Narayanasami, who recently quit as USE managing director, is said to have had differences with some promoters and other top executives on issues like transaction charges.

Mr Narayanasami had said in August that the USE would hold a board meeting by the month-end to decide on transaction charges, but the exchange is yet to charge anything for this market segment. Two of its rivals, the NSE and MCX-SX, have already begun levying a fee.

There have also been reports about a conflict of interest and a possible breach of fair trade practices due to one of its largest shareholders, Jaypee Capital, being a major trader also on the exchange.

The reports have said that about 80% of currency derivatives volumes on the USE come from Jaypee Capital alone.

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