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Sebi mulls independent SRO for stock exchanges

However, the day-to-day trading regulations and surveillance actions to remain with bourses themselves

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Capital market regulator plans to set up an independent SRO (Self Regulatory Organisation) for stock exchanges, but wants the day-to-day and surveillance actions to remain with bourses themselves.

Under the existing regulatory framework in India, the stock exchanges act as the front-line regulators for the market and the Sebi (Securities and Exchange Board of India) is the ultimate oversight and regulatory authority.

After putting in some efforts to effect a major overhaul last month in the way stock exchanges are run and owned, Sebi is now looking at ways to minimise any possible conflict of interest in the regulatory and business interests of bourses.

As per the new rules, exchanges can also get listed, although not on their own platform.

Sources said Sebi is of the view that an independent SRO could be set up to take over member regulation functions of stock exchanges in the long run, but trading regulations and surveillance actions should remain with bourses.

However, a dual-reporting structure could be introduced for the regulatory department of stock exchanges for now to tackle any conflict of interest. Under dual reporting, the head of regulatory department would report to the MD or CEO of the bourse as well as to an independent committee of the exchange's board.

The Sebi board has already approved a proposal for providing the seed fund for setting up the SRO, whenever deemed appropriate.

For trading regulations and surveillance actions also, the Sebi is in favour of dual-reporting for the heads of these departments -- to the CEO or MD as well as to an independent committee of the board of the bourse.

In the area of listing of the companies, Sebi would continue to prescribe minimum listing standards, but the exchanges would have the power to put in place additional stringent measures. The heads of listing department would also have a similar dual reporting.

Sebi has already announced that it would form a (CRC) with majority external and independent members to deal with all issues concerning 'conflicts of interest'. The CRC will consider matters of policy, guidelines involving conflict issues and recommend standards that are pertinent to the areas of potential conflict in the exchanges.

The issues of conflict will be referred by exchanges or may be taken up suo moto by the CRC.

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Sebi mulls independent SRO for stock exchanges

However, the day-to-day trading regulations and surveillance actions to remain with bourses themselves

Capital market regulator Sebi plans to set up an independent SRO (Self Regulatory Organisation) for stock exchanges, but wants the day-to-day trading regulations and surveillance actions to remain with bourses themselves.

Capital market regulator plans to set up an independent SRO (Self Regulatory Organisation) for stock exchanges, but wants the day-to-day and surveillance actions to remain with bourses themselves.

Under the existing regulatory framework in India, the stock exchanges act as the front-line regulators for the market and the Sebi (Securities and Exchange Board of India) is the ultimate oversight and regulatory authority.

After putting in some efforts to effect a major overhaul last month in the way stock exchanges are run and owned, Sebi is now looking at ways to minimise any possible conflict of interest in the regulatory and business interests of bourses.

As per the new rules, exchanges can also get listed, although not on their own platform.

Sources said Sebi is of the view that an independent SRO could be set up to take over member regulation functions of stock exchanges in the long run, but trading regulations and surveillance actions should remain with bourses.

However, a dual-reporting structure could be introduced for the regulatory department of stock exchanges for now to tackle any conflict of interest. Under dual reporting, the head of regulatory department would report to the MD or CEO of the bourse as well as to an independent committee of the exchange's board.

The Sebi board has already approved a proposal for providing the seed fund for setting up the SRO, whenever deemed appropriate.

For trading regulations and surveillance actions also, the Sebi is in favour of dual-reporting for the heads of these departments -- to the CEO or MD as well as to an independent committee of the board of the bourse.

In the area of listing of the companies, Sebi would continue to prescribe minimum listing standards, but the exchanges would have the power to put in place additional stringent measures. The heads of listing department would also have a similar dual reporting.

Sebi has already announced that it would form a (CRC) with majority external and independent members to deal with all issues concerning 'conflicts of interest'. The CRC will consider matters of policy, guidelines involving conflict issues and recommend standards that are pertinent to the areas of potential conflict in the exchanges.

The issues of conflict will be referred by exchanges or may be taken up suo moto by the CRC.

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