Why the Once-Mighty Calcutta Stock Exchange Is Nearing Its Final Chapter
Founded in 1908 in Kolkata’s Lyons Range, the Calcutta Stock Exchange (CSE) was once India’s second-largest stock exchange after the Bombay Stock Exchange (BSE). It served as a vital trading hub for eastern India’s business community for more than a century. However, after decades of operational and regulatory struggles, the CSE is now preparing for its final exit under SEBI’s supervision — marking the end of a significant chapter in India’s financial history.
As investors light their lamps this Diwali, CSE’s iconic building at Lyons Range will witness its last festive glow — a poignant reminder that in markets, adaptability is everything. Let’s explore how this century-old institution rose, stumbled, and ultimately fell behind in India’s fast-modernizing financial ecosystem.
Early Growth and Golden Era
The Calcutta Stock Exchange began operations in 1908, when trading was done through an open outcry system. It earned “permanent recognition” in 1980 under the Securities Contracts (Regulation) Act. During its peak years, thousands of brokers were active, and it was the second-most influential bourse after BSE.
Yet, while NSE and BSE embraced electronic trading in the late 1990s, CSE’s modernization was slow. Its electronic system, C-STAR, arrived too late and failed to gain scale.
When the Decline Began
The decline began around 2001 after the Ketan Parekh Scam triggered a ₹120 crore payment crisis, shaking investor confidence. By the mid-2000s, liquidity had almost vanished, and brokers began migrating to NSE and BSE.
When SEBI introduced its Exit Policy in 2008, requiring small exchanges to either merge or exit if they failed to meet turnover and compliance thresholds, the writing was on the wall for many regional exchanges — including CSE.
Timeline of Key Developments
| Period | Event | Impact |
|---|---|---|
| 2001–2008 | Ketan Parekh scam and liquidity crisis | Investor confidence collapsed; trading volumes dried up |
| 2011–2013 | SEBI suspended trading operations | CSE’s market activity ceased permanently |
| 2023–2025 | Voluntary exit under SEBI policy | Valuation and asset liquidation underway |
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Regulatory and Legal Battle
After SEBI suspended trading in 2013, CSE fought a prolonged legal battle in the Calcutta High Court and Supreme Court. While temporary stays were granted, the courts eventually upheld SEBI’s decision — emphasizing investor protection and compliance as non-negotiable.
By 2024, SEBI reaffirmed its stance that exchanges without clearing corporations or sufficient turnover (₹1,000 crore annual minimum) must exit. In February 2025, CSE filed its voluntary exit application, and by April, shareholders approved the move.
Asset Sale and Valuation
Currently, Rajvanshi & Associates is conducting the valuation, while Srijan Group is set to purchase CSE’s EM Bypass property for ₹253 crore. The funds will likely be distributed among shareholders and stakeholders as per SEBI’s exit policy.
Why It Couldn’t Survive
CSE’s downfall stemmed from structural inertia and delayed innovation. While NSE invested heavily in technology and transparency, CSE remained bogged down by legacy systems, manual settlements, and outdated governance practices. The absence of a modern clearing corporation further isolated it from institutional participants.
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Lessons for Investors
- Institutional legacy doesn’t guarantee survival — modernization is essential.
- Always verify whether your broker or trading venue is SEBI-compliant.
- Liquidity matters: thinly traded exchanges carry higher risk.
- Regulation ensures stability — non-compliance can lead to shutdowns.
- Markets reward innovation and scale, not nostalgia.
Investor Takeaway
Indian-Share-Tips.com Nifty Expert Gulshan Khera, CFP®, who is also a SEBI Regd Investment Adviser, observes that CSE’s closure underscores the importance of regulatory agility and digital infrastructure in capital markets. Investors should focus on transparent, liquid exchanges that provide secure and timely settlements. This story reminds us that longevity without innovation leads to irrelevance. For research-driven insights and expert analysis, visit Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.
Related Queries
- What happens when a stock exchange shuts down?
- How does SEBI’s Exit Policy protect investors?
- Why are regional stock exchanges fading in India?
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
