Sebi working on exit policy for bourses

Market regulator the Securities and Exchange Board of India (Sebi) is working on a number of new regulations for the stock exchanges, including a business-exit policy and moving the Investor Protection Funds of all bourses to a single agency.

"Sebi is exploring the option of moving the Investor Protection Fund (IPF) of exchanges to a single agency, which can provide a strong governance mechanism and deliver prompt investor protection," the capital market regulator said in a status report filed with its board late last month.

The regulator told the board, at its meeting on November 24, that the matter was under consideration.

The regulator further said that it "is currently in the process of reviewing the exit policy of stock exchanges".

"The primary issues to be addressed on the exit of stock exchanges are about dealing with exclusively listed companies and also the manner of dealing with assets of the stock exchanges.

"This would also need inputs from other stakeholders. Once the process of consultation is complete, the exit policy for exchanges will be put in place. Further a presentation is also proposed to be made to the Board in this meeting itself."

Regarding the stock exchange platform for SMEs (Small and Medium Enterprise), Sebi said that the required framework has been put in place and final approvals have also been granted to BSE and NSE to operationalize the SME platform.

"Sebi is in touch with both the exchanges to expedite the launch of the platform," it noted.

With regard to a volume-based graded compliance framework for stock brokers in addition to having the framework based on number of customer, Sebi said it seeks compliance from the stock brokers to ensure mitigation of Systemic Risk, Market Risk and Credit Risk.

"Prima facie, it is felt that dilution of any Circulars in this regard may pose risk to the market. If any existing directions are found to be very onerous, the same need to be identified first in consultation with the market participants.

"Impact of any change, if any, on the securities market will require to be assessed, before a final view can be taken," Sebi said.

About the stock borrowing and lending framework, Sebi said that any changes to the present framework on collaterals applicable to FIIs might require changes to the provisions of FEMA.

On the issue of inter-operability of clearing corporations, Sebi said that it was a complex matter and any decision would depend on the final ownership and governance norms for Market Infrastructure Institutions, on which deliberations have been continuing for many months now.

The Sebi also said that the securities markets were at a disadvantage when compared to the commodities segment on account of STT (Securities Transaction Tax), as commodities market is not subjected to any similar tax.