3.0 The application submitted by the applicant has been considered by SEBI under the SEBI (Stock Broker and Sub-Broker) Regulations, 1992 (hereinafter referred to as "the said regulations") and it was felt prima facie felt that registration should not be granted to the applicant. Therefore, in accordance with the requirements of regulation 8(1) of the said regulations, the applicant was granted an opportunity of being heard before me on September 16, 2002. The applicants appeared before me on the said date and submitted that their application may be considered favourably.
 
 

4.0 I have carefully considered the application, facts of the case and the submissions made by the applicant.

4.1 I note that the applicant is a wholly owned subsidiary of the VSE and has been incorporated with the sole object of carrying on trade as a member of the NSE in its Capital Markets and Futures & Options segments. SEBI vide Circular No. SMD-II/POLICY/CIR-37/99 dated November 26, 1999 allowed smaller stock exchanges to float subsidiary companies which can acquire membership of large stock exchanges such as NSE and the Stock Exchange, Mumbai. VSE has formed the applicant to acquire membership of NSE.

4.2 I note that VSE has already floated a subsidiary, namely – VSE Securities Limited (hereinafter referred to as "VSESL) which is a member of the Stock Exchange, Mumbai since February 15, 2000. I also note that since permission has been granted to smaller stock exchanges vide the said circular to float only one subsidiary, VSE has acted beyond the permission granted by the said circular. The permission to set up wholly owned subsidiaries was granted to smaller stock exchanges by SEBI with a view to revive them. Since VSE has already floated a subsidiary – VSESL, and the said subsidiary is a member of the Stock Exchange Mumbai and registered with SEBI as a Stock Broker and has now set up a separate subsidiary i.e. the applicant for seeking membership of NSE, I am of the opinion that it is not desirable that registration as a stock broker be granted to the applicant.

4.3 For the reasons stated above, the applications submitted by the applicant for registration as a stock broker in the Capital Market and Futures & Options segment of the NSE are hereby rejected. However, it is made clear that in case VSE SL is wound up or otherwise ceases to be in existence, the applicant shall be at liberty to submit a fresh application for registration as Stock Broker under the said regulations

4.4 A copy of this order shall be communicated to the applicant.