The SEBI (Securities and Exchange Board of India) Board met yesterday in Mumbai and took the following decisions
Networth of Stock Exchanges:
* The Stock Exchanges will have minimum net worth of Rs.100 crores
* The Existing Stock Exchanges will be given three years to achieve this networth of Rs.100 crores.
Ownership:
* The Stock Exchanges will have diversified ownership & no single investor will be allowed to hold more than 5% except the Stock Exchange, Depository, Insurance Company, Banking Company or public financial institution which may hold upto 15%.
* 51% of the holding of the Stock Exchanges will be held by public.
GOVERNANCE STRUCTURE:
* The heads of departments of Member Regulation will directly report to an independent committee of the board of the Stock Exchange as well as to MD/CEO (dual reporting).
* The long term goal would however be to set up an independent SRO at an appropriate time in future and provide the seed fund for the same.
* The head of departments of Listing Regulation will directly report to an independent committee of the board of the Stock Exchange as well as to MD/CEO (dual reporting).
* In order to prevent a regulatory race to the bottom SEBI will prescribe the minimum listing standards to be followed by Exchanges.
* The surveillance function will report to an independent committee of the Board of the Exchange as well as to the MD/CEO.
* All the independent committees will have a majority of Independent directors and will be headed by one of them.
* Besides the above a Conflict Resolution Committee (CRC) will be formed by SEBI with majority External and Independent members to deal with all issues concerning conflicts of interest. Issues of conflicts will be referred by Exchanges or may be taken up suo motu by CRC.
BOARD COMPOSITION:
* The Board of Stock Exchanges will not have any Trading Member representative.
* However, an Advisory Committee shall be constituted by the Board, comprising of Trading Members / Clearing Members, to take benefit of experience of such Members.
* All recommendations of the Advisory Committee shall be placed in the ensuing Board meeting for consideration and appropriate decision.
* The Public Interest Directors representation on Board of Stock Exchange will be 50%. The rest of the Board will constitute of shareholder Directors.
* Appointment of all Directors to the Board of Stock Exchanges will be subject to approval by SEBI.
Profits of Stock Exchanges:
* To bolster the risk management capacity of C.C. the Stock Exchange will be mandated to transfer 25% of their profits to the Settlement Guarantee Fund of the CCs where their trades are settled.
Listing of Stock Exchanges:
* The Stock Exchanges may be permitted to list when they put in place the appropriate mechanisms for tackling conflicts of interest.
* The Stock Exchanges will not be allowed to list on itself.
* No Stock Exchange shall be permitted to list within 3 years from the date of approval by SEBI.
Process for exit of non-operational stock exchanges
* A stock exchange without any trading at its own platform or where the annual trading is less than Rs. 1000 crores may apply for voluntary de-recognition and exit.
* If the stock exchange eligible for voluntary de-recognition is not able to achieve a turnover of RS. 1000 crores on continuous basis or does not apply for voluntary de-recognition and exit within a period of 2 years from the date of notification, SEBI shall proceed with the compulsory derecognition and exit of such stock exchange.
* With regard to exit option to shareholders of exclusively listed companies, a mechanism of dissemination board at stock exchange is decided on the lines of bulletin board.
Networth of Stock Exchanges:
* The Stock Exchanges will have minimum net worth of Rs.100 crores
* The Existing Stock Exchanges will be given three years to achieve this networth of Rs.100 crores.
Ownership:
* The Stock Exchanges will have diversified ownership & no single investor will be allowed to hold more than 5% except the Stock Exchange, Depository, Insurance Company, Banking Company or public financial institution which may hold upto 15%.
* 51% of the holding of the Stock Exchanges will be held by public.
GOVERNANCE STRUCTURE:
* The heads of departments of Member Regulation will directly report to an independent committee of the board of the Stock Exchange as well as to MD/CEO (dual reporting).
* The long term goal would however be to set up an independent SRO at an appropriate time in future and provide the seed fund for the same.
* The head of departments of Listing Regulation will directly report to an independent committee of the board of the Stock Exchange as well as to MD/CEO (dual reporting).
* In order to prevent a regulatory race to the bottom SEBI will prescribe the minimum listing standards to be followed by Exchanges.
* The surveillance function will report to an independent committee of the Board of the Exchange as well as to the MD/CEO.
* All the independent committees will have a majority of Independent directors and will be headed by one of them.
* Besides the above a Conflict Resolution Committee (CRC) will be formed by SEBI with majority External and Independent members to deal with all issues concerning conflicts of interest. Issues of conflicts will be referred by Exchanges or may be taken up suo motu by CRC.
BOARD COMPOSITION:
* The Board of Stock Exchanges will not have any Trading Member representative.
* However, an Advisory Committee shall be constituted by the Board, comprising of Trading Members / Clearing Members, to take benefit of experience of such Members.
* All recommendations of the Advisory Committee shall be placed in the ensuing Board meeting for consideration and appropriate decision.
* The Public Interest Directors representation on Board of Stock Exchange will be 50%. The rest of the Board will constitute of shareholder Directors.
* Appointment of all Directors to the Board of Stock Exchanges will be subject to approval by SEBI.
Profits of Stock Exchanges:
* To bolster the risk management capacity of C.C. the Stock Exchange will be mandated to transfer 25% of their profits to the Settlement Guarantee Fund of the CCs where their trades are settled.
Listing of Stock Exchanges:
* The Stock Exchanges may be permitted to list when they put in place the appropriate mechanisms for tackling conflicts of interest.
* The Stock Exchanges will not be allowed to list on itself.
* No Stock Exchange shall be permitted to list within 3 years from the date of approval by SEBI.
Process for exit of non-operational stock exchanges
* A stock exchange without any trading at its own platform or where the annual trading is less than Rs. 1000 crores may apply for voluntary de-recognition and exit.
* If the stock exchange eligible for voluntary de-recognition is not able to achieve a turnover of RS. 1000 crores on continuous basis or does not apply for voluntary de-recognition and exit within a period of 2 years from the date of notification, SEBI shall proceed with the compulsory derecognition and exit of such stock exchange.
* With regard to exit option to shareholders of exclusively listed companies, a mechanism of dissemination board at stock exchange is decided on the lines of bulletin board.
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