It has been reported that now there would be change in the procedure of listing recommendations by Bimal Jalan committee, the former governor of the Reserve Bank of India.
This has made by the Capitalization market regulator SEBI which has allowed listing of local stock exchanges on basis of some conditions, as like some countries.
Now as per new norms, after three years from the time of securing approvals, Stock exchanges and depositories will self-list. But one condition is that it will do after a departure of their regulatory and business functions are made to solve conflict of interest.
The new rules has been accepted by SEBI on Monday, during the Stock Exchange board meeting, in which SEBI demanded an independent clearing corporations along with transfer of 25% of the profits of bourses to a Settlement Guarantee Fund. It makes stock exchanges to control 51% of the holding in clearing corporations.
However the Jalan committee was not in favour of listing, now supporting the decision, and that accepted by SEBI only for clearing corporations that bear the risk of guaranteeing of securities and funds.
The only one reason to allow is that committee does not want to create tough situation of profitability or shareholder profits etc, in maintaining of the prominent stock exchanges.
Talking to media, Jalan said “A lot of countries have that and all these data provided in the report itself. But, on balance at that point in time, it was felt, because we were passing through some difficult phase in the financial market, to postpone listing for the time being.”
According to him, now the stock market condition has changed, expecting huge competition among stock exchanges. To prevent further future steps, the committee will form another committee in the next five-years.
With majority of members, SEBI will formed a Conflict Resolution Committee (CRC) to resolve all interest conflicting issues that will be referred by Exchanges or may be taken up suo motu by CRC.
Meanwhile, Shareholders and investors in stock exchanges now have three years to reduce their equity or getting a license to come in it. And for brokers who are the major users, there is chance to representing operation on the board of an exchange.
