Financial Daily from THE HINDU group of publications
Monday, Dec 30, 2002
Financial Daily from THE HINDU group of publications Monday, Dec 30, 2002 |
|
|
|
|
|
Opinion
-
Regulatory Bodies & Rulings Columns - Policy Watch Listing authority high on agenda Shaji Vikraman
WITH the empowerment of the capital market regulator following the amendments to the SEBI Act, both the Securities and Exchange Board of India and the Finance Ministry have now got down to work on a few other proposals. Last year, both had talked of setting up a Central Listing Authority (CLA) and the corporatisation and demutualisation of stock exchanges. With both the proposals approved by the SEBI board, work is underway on the CLA. A SEBI-sponsored committee had recommended the setting up of the CLA to bring about a measure of uniformity in scrutinising listing applications and to take a look at the listing agreements periodically. The ostensible idea was to stop those fly-by-night operators who could list on one of the smaller stock exchanges after being rejected for listing at a bigger bourse. Several hapless retail investors tooka hit due to the inconsistent application of the listing rules during the last decade. That is when the CLA proposal was mooted. The SEBI-sponsored committee envisages every company seeking the approval of the Authority for getting its securities listed. After the CLA's go ahead, the company can then seek the clearance for listing at any stock exchange which would independently decide on granting approval for the stock's listing. The stock exchanges can reject for listing the application of a company's stock which has already been cleared by CLA. The word now is that SEBI has moved half-way house on the CLA. A good number of the members of the Authority would be from the stock exchanges although of the suggested 11-member CLA, only four need be drawn from the bourses. The half-way house approach may well be because not many, including perhaps SEBI, are convinced that several of the regional stock exchanges which are on oxygen should not be left to die a natural death. This when some of them have registered a zero turnover several times. The CLA will have to be activated by transferring a portion of the unutilised corpus lying with the stock exchanges in the Investor Protection Fund, the Investor Services Fund and the Consumer Protection Fund. The corporatisation and demutualisation move will, however, have to wait. For, the Law Ministry has taken the view that a change in the Securities Contract (Regulation) Act is needed for the stock exchanges to make the transition to a company incorporated under the Companies Act. This after the Finance Ministry had reckoned for a long time that an executive order would do only to be corrected by the Law Ministry. This will have to wait for the next session of Parliament. Instead of seeking Parliamentary approval for amendments piece-meal, North Block wants to take a look at the securities laws to ensure that next time, comprehensive changes are made. For instance, there is no clear view yet on interest rate derivatives. Although the banking regulator has sought legal opinion on that, there is no final view yet on whether it is a security. The Law Ministry's opinion is yet to be sought on this and this may well be done early next year to go with other proposed amendments to the Securities laws.
Send this article to Friends by
E-Mail
|
Stories in this Section |
|
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription Group Sites: The Hindu | Business Line | The Sportstar | Frontline | Home |
Copyright © 2002, The
Hindu Business Line. Republication or redissemination of the contents of
this screen are expressly prohibited without the written consent of
The Hindu Business Line
|