Stock Exchange ownership: Jalan panel to submit report to Sebi

The Sebi-appointed Bimal Jalan committee will submit a report on ownership and governance structure of stock exchanges to the market regulator later this month.

The report assumes importance in the wake of rejection of application of MCX-SX by Sebi to launch a bourse for equities trading on the ground that it violated shareholding norms.

"The Committee's work is in final stages and it expects to submit the report to Sebi in the third or fourth week of this month," Jalan told PTI in an email reply.

The market regulator Sebi has constituted the committee under former RBI governor Bimal Jalan to review ownership and governance structure of market infrastructure institutions, including stock exchanges.

"The emerging market microstructure and the evolving role of market infrastructure institutions call for a review of their ownership and governance structure to ensure that they remain relevant and effective," Sebi had said while constituting the committee earlier this year.

The committee had sought opinion of market participants whether the present ownership restrictions on stock exchanges and other market infrastructure institutions needed review.

It had asked whether diversified model was a better model or strategic/anchor investor route was more useful.

The committee also sought the opinion whether there should be a lock-in period, if anchor investors were permitted in stock exchanges and other infrastructure bodies.

Favouring diversified shareholding in stock exchanges, RBI Deputy Governor Shyamala Gopinath had said recently,"a diversified ownership is very necessary in a market infrastructure company. Ultimately, exchanges are public utilities. (It) is a means of good governance."

Currently, no single or group entities are allowed to hold more than 5 per cent stake in stock exchanges, except banks, financial institutions and stock exchange themselves.

Promoters of MCX Stock Exchange--commodity bourse MCX FTIL--holds five per cent each in the stock exchange.

Sebi said two promoters of MCX-SX were acting in concert, and therefore together they could not hold more than 5 per cent of shares in the exchange.

Against the Sebi order, MCX-SX has moved Bombay High Court.