Wednesday 4 April 2012
Sebi allows bourses to get listed, but with conditions
Sebi on Monday issued fresh guidelines on ownership, governance and listing of stock exchanges that will allow domestic stock bourses to list , but with conditions.
Sebi issues rules for algorithmic trading
1.It also capped individual holding at 5 per cent and fixed their minimum networth of bourses at Rs 100 crore. Besides, restrictions have also been placed on salaries of key management.
2.Allowing listing of bourses was decided after considering the much-debated Bimal Jalan Committee recommendations which had not favoured listing of stock exchanges.
3.Significantly, Sebi said an exchange cannot be listed on itself, which means if the BSE were to go public, it has to do so on the NSE or another exchange and vice versa.
4."The stock exchanges will have diversified ownership and no single investor will be allowed to hold more than 5 per cent except the stock exchange, depositories, insurance company, banks or public financial institutions which may hold up to 15 per cent," Sebi said after the board meeting.
5."The Board of the stock exchanges/clearing corporations will not have any trading member/clearing member representative. However, an advisory committee shall be constituted by the Board, comprising trading members/ clearing members to take benefit of experience of such members."
6.Broking community slammed the Sebi decision on salaries and banning brokers from the ownership of exchanges.
7."We are kept out of the boards, which is not good. The worst part of the decision is that bourses will not have professionals as salary has been capped," said a broker.
8.While the premier exchange BSE refused to comment, the largest bourse NSE in an official statement said, "It is a welcome and significant development, of considerable importance to the market infrastructure institutions.
9.On networth, Sebi said, "Exchanges will have a minimum networth of Rs 100 crore and the existing exchanges will be given three years to achieve this."
10.It further said, "exchanges may be permitted to list when they put in place the appropriate mechanisms for tackling conflicts of interest. Exchanges will not be allowed to list on itself. Also, no stock exchange shall be permitted to list within three years from the date of Sebi approval."
When contacted BSE managing director and chief executive Madhu Kannan said, "No comments, we are studying the Sebi decision."But source at the BSE, in which 29 per cent is held by FIIs, said the premier exchange will initiate the process of listing its shares shortly.
"We are ready to list and the listing may happen either through open offer or via some other instruments," a BSE official said on condition of anonymity.
An industry analyst said, "Unless the regulatory role is separated from exchanges there can be serious conflicts of interest. Before listing norms are issued, it has to be ensured that the issues of conflicts of interest are addressed so that there is no race to the bottom."
The Sebi also said the minimum networth for the clearing corporations (CCs) and the depositories will be Rs 300 crore and Rs 100 crore respectively.
"All the existing clearing corporations shall be mandated to build up to the prescribed networth of Rs 300 crore over a period of three years from the date of this notification," the regulator said.
It may be noted that the Bimal Jalan Committee report titled 'Review of Ownership and Governance of Market Infrastructure Institutions' (MIIs) submitted nearly 18 months back had drawn sharp reaction for having opposed the move to allow listing of stock exchanges citing conflict of interest issues.
Sebi issues rules for algorithmic trading
1.It also capped individual holding at 5 per cent and fixed their minimum networth of bourses at Rs 100 crore. Besides, restrictions have also been placed on salaries of key management.
2.Allowing listing of bourses was decided after considering the much-debated Bimal Jalan Committee recommendations which had not favoured listing of stock exchanges.
3.Significantly, Sebi said an exchange cannot be listed on itself, which means if the BSE were to go public, it has to do so on the NSE or another exchange and vice versa.
4."The stock exchanges will have diversified ownership and no single investor will be allowed to hold more than 5 per cent except the stock exchange, depositories, insurance company, banks or public financial institutions which may hold up to 15 per cent," Sebi said after the board meeting.
5."The Board of the stock exchanges/clearing corporations will not have any trading member/clearing member representative. However, an advisory committee shall be constituted by the Board, comprising trading members/ clearing members to take benefit of experience of such members."
6.Broking community slammed the Sebi decision on salaries and banning brokers from the ownership of exchanges.
7."We are kept out of the boards, which is not good. The worst part of the decision is that bourses will not have professionals as salary has been capped," said a broker.
8.While the premier exchange BSE refused to comment, the largest bourse NSE in an official statement said, "It is a welcome and significant development, of considerable importance to the market infrastructure institutions.
9.On networth, Sebi said, "Exchanges will have a minimum networth of Rs 100 crore and the existing exchanges will be given three years to achieve this."
10.It further said, "exchanges may be permitted to list when they put in place the appropriate mechanisms for tackling conflicts of interest. Exchanges will not be allowed to list on itself. Also, no stock exchange shall be permitted to list within three years from the date of Sebi approval."
When contacted BSE managing director and chief executive Madhu Kannan said, "No comments, we are studying the Sebi decision."But source at the BSE, in which 29 per cent is held by FIIs, said the premier exchange will initiate the process of listing its shares shortly.
"We are ready to list and the listing may happen either through open offer or via some other instruments," a BSE official said on condition of anonymity.
An industry analyst said, "Unless the regulatory role is separated from exchanges there can be serious conflicts of interest. Before listing norms are issued, it has to be ensured that the issues of conflicts of interest are addressed so that there is no race to the bottom."
The Sebi also said the minimum networth for the clearing corporations (CCs) and the depositories will be Rs 300 crore and Rs 100 crore respectively.
"All the existing clearing corporations shall be mandated to build up to the prescribed networth of Rs 300 crore over a period of three years from the date of this notification," the regulator said.
It may be noted that the Bimal Jalan Committee report titled 'Review of Ownership and Governance of Market Infrastructure Institutions' (MIIs) submitted nearly 18 months back had drawn sharp reaction for having opposed the move to allow listing of stock exchanges citing conflict of interest issues.
