The top brass of stock exchanges, the Securities and Exchange Board of India (Sebi), depository services companies and a few large foreign institutions will meet former Reserve Bank of India governor Bimal Jalan to discuss the report submitted by a panel led by him on the working and ownership norms of market infrastructure institutions (MIIs).
The closed door meeting will be organised by the Confederation of Indian Industries on Tuesday in New Delhi.
Among others, the meeting will be attended by Madhu Kannan, chief executive officer and managing director (MD) of Bombay Stock Exchange (BSE), S Ramadorai, non-executive chairman of BSE, Chitra Ramkrishnan, deputy managing director of the National Stock Exchange and Joseph Massey, MCX Stock Exchange MD. Sebi's executive director J N Gupta and former board member K P Krishnan, both of whom were also members of the Jalan committee, will also be present . While head of National Securities Depository Ltd Gagan Rai will act on behalf of depositries, the FIIs will be represented by Anshul Krishnan of Goldman Sachs and Sanjay Nair of KKR Advisors.
BSE and MCX SX have already expressed their displeasure over most suggestions made by the Jalan panel. Speaking at a Ficci conference in Mumbai on Thursday, Massey had said, “The report is favouring only a particular model, which suited the NSE. It discourages competition at a time when there is a dire need for financial inclusion. This could vitiate the investment scenario in the county.”
MCX SX is locked in a legal battle with Sebi over licence for the fledgling stock exchange.
The BSE board, which met here today, also unanimously opposed the Jalan report. A BSE board member told Business Standard: “If the Jalan suggestions are accepted, it will be extremely difficult for BSE to compete with NSE (National Stock Exchange). Top talent will be hard to attract, innovation will take a back seat and marquee shareholders will vanish.”
A seven-member committee headed by the former RBI governor had suggested last month, that exchanges should not be allowed to list, a ceiling should be put on profits and dividends and limit the role of anchor investors to only domestic players. These suggestions were seconded by Sebi Chairman C B Bhave.
The BSE board has raised doubts over the comments of the Jalan committee that they were not allowing exchanges to list for “public good.”
“What is public good about not allowing exchanges to list? Is it saying that large institutions and corporate individuals can invest in an exchange but not the retail participants? Why can’t a foreign exchange be allowed as anchor investor? Is it that Jalan committee is only too satisfied with the NSE model of working?” asked another BSE director.
BSE has just over one per cent market share. On an average, equity derivatives worth Rs 1,00,000 crore is traded on NSE. BSE was trying to rope in large US or European exchanges as its anchor investor and a strategic partner to take on NSE. This may now hit a road block. BSE was planing to launch its initial public offering by March 2011.