SEBI Finalises Exit Policy
Capital markets regulator the Securities and Exchange Board of India (SEBI) is close to firming up an exit policy for regional stock exchanges. SEBI is set to allow any regional stock exchange looking at voluntarily exiting out of this business by derecognising it. However, SEBI is unlikely to renew licences of those regional stock exchanges, where there are hardly any trades or business. The SEBI board discussed this issue at its last board meeting and an exit policy is expected to be outlined shortly, according to sources familiar with the matter. Subsequently, the issue of handling the valuation and distribution of regional bourses’ assets will also be dealt with. The regulator is likely to make public the agenda of the last SEBI board meeting, which also included the discussion on the future of regional stock exchanges on its website on December 15.
About five regional bourses, including Mangalore, Hyderabad, Rajkot, Magadh and Coimbatore Etock Exchange, have already been derecognised, while 15 bourses have demutualised. Some of these exchanges are not keen to shut shop. For instance, the Calcutta Stock Exchange has tied up with the BSE for offering a trading platform to its members while the Madras Stock Exchange has an in-principle approval for a similar agreement with the NSE.
In 2006, a committee headed by G Anantharaman, former whole-time member of SEBI, recommended, among other things, that regional bourses be allowed to self-list, or to bring in a strategic partner who could hold less than 15% voting rights in the exchange. Those regional bourses that wanted to close down should be allowed to do so, and investor protection funds available with these bourses should vest with the regulator, the committee said. Taking into account the future of the subsidiaries of regional bourses, the committee had said such an entity would also have to change its name and style to avoid any representation of any present or past affiliation with an exchange.
