Historic Indian stock exchange shuts down after scam allegations; 117 years of trading end

The Calcutta Stock Exchange's Final Journey: The Calcutta Stock Exchange (CSE), one of India's oldest stock exchanges, has now entered its final days. After a decade-long legal battle, the institution is on the verge of voluntarily shutting down trading. The 'Kali Puja' and 'Diwali' celebrations on October 20 will likely be its final celebrations, marking a farewell to Kolkata's financial legacy. Established in 1908, the 117-year-old exchange once rivaled the BSE, but regulatory violations and scams have pushed it into recession. Now, an application for license surrender is pending with SEBI, and the exit process is progressing rapidly.

The End of a Decade-Long Battle

In April 2013, the Securities and Exchange Board of India (SEBI) suspended trading at the CSE for non-compliance with regulatory rules. This was followed by years of struggle in the courts against SEBI's directives. But now the exchange has conceded defeat—deciding to voluntarily surrender its stock exchange license. In December 2024, the board of directors resolved to withdraw the pending cases in the Calcutta High Court and the Supreme Court. A formal application was submitted to SEBI on February 18, 2025, and approval was granted at an extraordinary general meeting (EGM) of shareholders on April 25, 2025.

CSE Chairman Dipankar Bose said, "Following SEBI's approval, CSE will function as a holding company. Our 100%-owned subsidiary, CSE Capital Markets Private Limited (CCMPL), will continue broking as a member of NSE and BSE." This will preserve the exchange's legacy, but the era of independent trading will end.

Further Process: From Valuation to SEBI Approval

The process of exiting the stock market is underway under SEBI guidelines (SEBI Regulations, 2018). The key steps are as follows:

• Final Valuation Stage: SEBI has assigned Rajvanshi & Associates to assess the exchange's assets, liabilities, and net worth. The report is expected to be completed soon, including accounting for the 3-acre land on EM Bypass (already approved for sale to Srijan Group for ₹253 crore).
• SEBI Final Approval: 1-2 months after the valuation (by November-December 2025), SEBI will approve the closure. This will involve settling the claims of 650 member brokers and 1,749 listed companies—transferring clients to NSE/BSE.
• Employee Settlement: All employees have opted for the Voluntary Retirement Scheme (VRS). A lump sum payment of ₹20.95 crore will be made, resulting in annual savings of ₹10 crore. Some employees have been retained on contract for compliance work.
• Financial Settlement: Funds from the asset sale will be used to settle liabilities.

"The CSE has played a vital role in India's capital markets, but now is the time for a new beginning," Bose said in his annual report for FY 2024-25.

The Dark Shadow of the Ketan Parekh Scandal 

Established in 1908, the CSE was once the financial hub of Kolkata—capable of surpassing the BSE in trading volume. But the Ketan Parekh Scandal of 2001 (Rs 120 crore) brought everything to a screeching halt. Many brokers failed to meet settlement obligations, leading to a payment crisis. Investors and SEBI lost confidence, and trading activity plummeted. Veteran broker Siddharth Thirani recalled, "In the 1990s, we used to pray to Goddess Lakshmi before daily trading at Lions Range. This hustle and bustle continued until April 2013. Now, this Diwali is like bidding farewell to that legacy."

Wider Impact: Lessons for Regional Markets

The closure of the CSE is a warning to other regional exchanges (such as the ISE and MPSE). The focus on the NSE and BSE will increase, but a chapter in Kolkata's financial story is closing. Nostalgia is resurfacing among members—the joy of Kali Puja has now given way to sadness.