SEBI notifies norms for ownership, listing of stock exchanges

MUMBAI: Capital markets regulator Securities and Exchange Board of India or SEBI has notified new rules for ownership and governance of stock exchanges, which is expected to encourage the setting up of new bourses and enable exchanges to get listed.

The new rules cap the ownership of a single investor at 5% with an exemption for stock exchanges, depositories, insurance and banking companies and public financial institutions, which can hold up to 15%.

The net worth of a stock exchange has been pegged at 100 crore, while 51% of the equity has to be mandatorily held by public shareholders.

SEBI has said that direct and indirect exposure to any stock exchange will be considered while calculating the prescribed shareholding limit. Any shareholder having an equity holding higher than the prescribed limit will be allowed to prune the stake within three years of securing approval from the regulator.

The amendments come in the wake of a legal tussle between the regulator and MCX Stock Exchange, which had sought approval to start an equity platform. The Supreme Court had directed SEBI to come out with its decision on this matter by next month.

The new rules also allow stock exchanges to list on any recognised stock exchange other than itself and its associated stock exchanges, within three years of commencing operations, subject to certain criteria.

"Based on the board decisions, the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012, (SECC) have been notified on June 20, 2012 to regulate recognition, ownership and governance in stock exchanges and clearing corporations," SEBI said in a release on Thursday.

SEBI had approved changes to the Manner of Increasing and Maintaining Public Shareholding (MIMPS) in recognised stock exchanges at a board meeting in April this year.

The regulator said that it was in the process of formulating norms and procedures to implement other board decisions taken on April 2, 2012, such as regulating conflicts of interest in market infrastructure institutions. SEBI is in the process of formulating minimum listing standards for listing of companies on stock exchanges. Stock exchanges could prescribe more stringent norms if they wish to, the regulator has said.

A Conflicts Resolution Committee or CRC will be formed by SEBI with a majority of external and independent members to deal with all issues concerning conflicts of interest.

The CRC will consider matters of policy and guidelines involving conflict issues and recommend standards pertinent to the areas of potential conflict in exchanges.

Issues of conflict will be referred by exchanges or may be taken up suo moto by the CRC. The independent oversight committees of the exchanges for member regulation, listing functions and trading and surveillance function shall have regular interactions with the CRC.