Sebi notifies new shareholding, governance norms for bourses

Market regulator Sebi today notified new norms for ownership and governance of stock exchanges and other market infrastructure institutions -- a move which among others could pave way for setting up of new bourses and also permit the exchanges to get listed on other bourses.

As per the new norms, every recognised stock exchange shall have a minimum networth of Rs 100 crore at all times and at least 51% of stake has to be held by public.

Besides, no Indian entity, either individually or together with persons acting in concert, would be allowed to acquire or hold more than 5% stake directly or indirectly in a stock exchange.

However, stock exchanges, depositories, banks, insurance companies and public financial institutions from India can acquire or hold up to 15% stake.

The new norms are expected to pave the way for setting up of new stock exchanges. Currently, there are two national level bourses, BSE and NSE, in the country, while the third one MCX-SX is waiting for permission to begin trade in the equity segment. MCX-SX is currently permitted only in the currency segment.

The individual shareholding would be capped at 5% for all non-Indian entities without any exemptions, and their collective holding cannot exceed 49%. Out of this, the holding through FDI route would be capped at 26% and that through FII at 23%. No FII would be allowed to acquire shares of a recognised stock exchange otherwise than through secondary market.

For a stock exchange that is not listed, an FII may acquire shares through transactions outside of a recognised stock exchange provided it is not an initial allotment of shares; and for listed bourses, the FIIs can transact through the exchange where the shares are listed.

Sebi also said that the existing regulations for Manner of Increasing and Maintaining Public Shareholding (MIMPS) in Recognised Stock Exchanges stand repealed after notification of new norms.

The shareholders having stake in excess of the new limits would have to comply with new norms within a period to be decided by Sebi and such period could be of up to three years.

For listing, Sebi said that a recognised stock exchange may apply for listing of its securities on any bourse other than itself and its associated stock exchange, provided they comply with the new regulations of ownership and governance, has completed three years of continuous trading operations and has got Sebis approval.

Also, the shares of a recognised stock exchange and a recognised clearing corporation would have to be in demat form, while clearing corporation cannot hold any right, stake or interest in an exchange.