Sebi sets up panel to review bourses structure

Market regulator the Securities and Exchange Board of India (Sebi) has constituted a committee headed by former RBI governor Bimal Jalan to review the structure of the stock exchanges as their role as self-regulatory bodies and functions as profit entities are sometimes conflicting in nature.

"The role of market infrastructure institutions has been continuously evolving to meet the challenges of the emerging securities market. Accordingly, a committee has now been constituted under the chairmanship of Bimal Jalan," Sebi said in a release here today.

The committee may also look into the listing-related matters of the stock exchanges.

Commenting on the move, Prime Database Managing Director Prithvi Haldea said: "The committee has been set up to look into the ways to avoid conflict of interest between profit functions and regulatory functions of the stock exchanges. It could also look at the listing related matters of these exchanges."

The Sebi said these institutions are increasingly called upon to undertake regulatory functions, including supervision of the markets, while simultaneously pursuing commercial objectives.

"The Sebi board had considered the issues with regard to the emerging market microstructure and the evolving role of market infrastructure institutions, which call for a review of their ownership and governance structures to ensure that they remain relevant and effective," the Sebi circular said.

CNI Research Chairman and Managing Director Kishor Ostwal said the committee has been set up to look into the problems of the existing stock exchanges and new bourses that may come up in future.

Currently, the Bombay Stock Exchange and National Stock Exchange are two premier stock exchanges, but other players like Financial Technologies are interested to come with stock exchange.

Earlier, the government had made all stock exchanges to shed members stake in them to aggregate below 51 per cent.

The Sebi board in its meeting held on December 22, 2009 had approved the proposal to constitute a committee.

Committee members include Joint Secretary in the Finance Ministry K P Krishnan, Tata Industries Managing Director Kishor Chaukar, Kotak Mahindra Bank Managing Director Uday Kotak, Officer on special duty at the National Institute of Securities Market G Sethu, Sebi Whole-time Member KM Abraham, and Sebi Executive Director J N Gupta.