Sebi extends deadline to Dec 31 for comments on clearing corps' ownership

Markets regulator Sebi on Friday extended the timeline till December 31 to submit public comments on a proposal of diversifying ownership of clearing corporations, which are at present fully owned by stock exchanges.

Sebi floated a consultation paper on the review of ownership and economic structure of clearing corporations (CCs) on November 22 and sought comments on the same by December 13.

"Based on the representations received by Sebi from some of the entities/organisations, it has been decided to extend the timeline to submit the public comments on the consultation paper till December 31, 2024," the regulator said in a statement.

In its consultation paper, Sebi proposed diversifying and widening the ownership of the clearing corporations, which are at present wholly-owned subsidiaries of stock exchanges.

Sebi rules prohibit CCs from listing publicly but allow stock exchanges (their parent entities) to list, indirectly exposing CCs to market pressures.

"While looking to broad base and diversify the ownership of CCs, it is important to ensure that such a transition is fair to all stakeholders (including to the current shareholders of the parent exchange) and causes minimal disruption to the capital markets ecosystem," Sebi stated.

The first option suggested was a pro-rata distribution of 49 per cent of shareholding of a CC to the existing shareholders of the parent exchange and the balance of 51 per cent of shareholding to remain with the parent exchange to start with.

The parent exchange could then be given 5 years to bring down this holding to 15 per cent or lower, by selling down their stake to other exchanges. This approach would mean that CCs would remain majority-owned by exchanges in line with the SECC norms.

"Alternatively, the entire shareholding of a CC could be allotted to the existing shareholders of exchanges, who would then be free to trade their shares in the CC. This would allow for a clean break of the CC from its parent exchange, in a manner that is fair to the existing shareholders of the parent exchange," Sebi proposed.

Further, it was suggested that CCs will continue to be prohibited from listing.