Sebi issues new listing norms for stock exchanges

Paving way for listing of the stock exchanges, markets regulator Sebi today announced detailed guidelines for their compliance to disclosure and listing regulations including for ensuring 'fit and proper' status of every investor in the bourses.
The exchanges would need to take steps for maintaining of 51 percentage of shareholding of Public Category and ensuring that holding of trading members, associates or agents does not exceed 49 per cent.
Leading exchange BSE has been seeking to get listed for a long time, but its plans have been hanging in balance due to lack of regulatory clearances. Sebi had first announced its norms for listing of bourses over three years ago.

The capital markets watchdog has been of the view that necessary safeguards need to be first put in place for tackling conflict of interest and other issues.
In a circular, Sebi said the listed stock exchange will have to disseminate the details of its shareholding with category wise breakup on a continuous basis, on its website.
Similarly, the bourse where the shares are listed, shall also display this information.

Besides, depositories will have to put in place systems for capturing the shareholding data of trading members or their associates and agents and ensure that there is a mechanism for coordination between the depositories towards sharing of information.

A mechanism would need to be put in place providing for approval of the listed stock exchange as and when holding of trading members/associates/agents reaches 45 per cent.
In case they purchase shares without requisite approval, the depositories will initiate consequential action such as freezing of voting rights and all corporate benefits in respect of such stake till the time the same is divested.
The divestment of any excess shareholding beyond the specified limit would be through a special window provided by the stock exchange.
The new norms provide that to ensure compliance that every shareholder be Fit and Proper, all applicant in the IPO or Offer For Sale will be required to make declaration to this effect at the time of making application.

The listed stock exchange will have to submit an exceptional report regarding the shareholders who are not 'fit and proper' and action taken thereof on a quarterly basis.
Sebi will also issue necessary procedures to ensure compliance of the provisions post listing. The shareholding threshold of 2 per cent, 5 per cent or 15 per cent (for different classes of investors) as the case may be, will be monitored through Depository mechanism.
"The depositories shall put in place a mechanism to ensure that no shareholder of listed stock exchange gets credit of shares beyond 5 per cent or 15 per cent, as applicable," the regulator said in a circular.

The depositories shall generate an alert when such holding exceeds 2 per cent and monitor the same under intimation to Sebi, it added.
The stock exchanges, both listed and where the securities are listed, and depositories will have to ensure that such mechanism be in place latest by March 31, 2016.