This post is in response to a blog (called Honest Truth) by one of my favourite bloggers - Ajit Dayal. He has commented about dangers of stock-exchange listing. I am unable to give the link to Ajit's blog because of some copyright issues. Google it and you shall find. Here goes my response:
Is the Ashok Desai in your blog the same Ashok Desai of 'Price of Onions' fame? I am a layman without any economics background. I remember reading 'Price of Onions' and nodding my head in agreement with most of the conclusions and illustrations. So if that same Ashok Desai is expressing a view, I will rather read it in his own words before agreeing with the opposing opinion (i.e. yours).
I agree and disagree with your post.
First the agreement part. I believe that stock-exchange is like police. Free competition and profit maximization should not be applicable for police. Monopoly of violence should reside with one agency and it needs to be regulated. Otherwise, only rich will be able to afford police and police will become mercenary. Same for stock-exchange. It needs to have regulation. I fully agree with you on that.
Now to disagreements. I do not know what happened behind the scenes, but I do know that private telecom companies come to my doorstep, pester me, plead with me to take a connection. I really get to choose. When there are complaints, I can call up customer care, yell at them and get the problem fixed (albeit in 15 days, rather than the 48 hours they promise). Contrast this with what used to happen earlier with government phones. Or for that mattter what happens today with BSNL connection. No Mr. Dayal, I still believe privatization and profit-making and multiple-players were good for telecom-customer.
On the airlines reference, I disagree again. You get those exorbitant prices only for the bookings made on the day or day before. People like me who plan air-travel 2-3 months beforehand, still get the cheap prices. Regarding service and on-board facility, I am ready to pay 10-15% premium for travelling a route through private airlines rather than air-india.
Your reference to SBI and ICICI was again irrelevant. Yes, I keep my money with SBI for security concerns. However, this sense of security does not come because of any belief in SBI being better regulated. SBI is not better regulated. I do not believe that SBI has better mechanisms and better people than ICICI. I kept money with SBI because I know that government will bail out SBI in case of crisis. This bailing out of SBI/LIC is not healthy but it is precisely this unhealthy assurance which makes me keep money in SBI. I am not very proud of this, but such is life.
Bottomline, I agree with your main assertion that exchanges should not be listed. I do NOT agree with many other points you mentioned in your blog. I would rather read a blog/article by Ashok Desai on the same topic before making my mind. I will not send the email to SEBI right now. I also hope that SEBI looks at the logic rather than #-of-emails they receive. Even if Mr. Ajit Dayal's is the only mail against listing of exchanges, it should win over crores of opposing emails on the strength of logic and not numbers.