Stocks

SEBI could consider allowing bourses to trade in their own stocks ...

KS Badri Narayanan Chennai | Updated on January 12, 2018 Published on January 20, 2017

... since cross-listing will check conflict of interest, other issues

So, the BSE is set to launch its initial public offering on January 23 in a price band of ₹805-806. Through the offer, 262 of the BSE’s existing shareholders will offload about 1.54 crore shares to raise around ₹1,200 crore.

The stock will be listed only on the NSE, since self-listing is not permitted.

One of the main objections SEBI cites on self-listing is conflict of interest.

“Stock exchanges in India and many other countries have multiple functions. One key function is to be the regulator for all brokers; and an exchange is the first-line regulator for them. They are also a regulator for listed companies. If you are a for-profit company and if you are expected to take action against those entities from whom you get your revenue, there is a very likely conflict of interest,” SEBI chief had said earlier.

Under ‘permitted’ segment

Despite the Bimal Jalan Committee opposing the idea of stock exchanges being allowed to go public, SEBI permitted bourses to list. However, SEBI chief UK Sinha had then said that since listing of stock exchanges is a global practice, India too should permit it. However, India need to put in place safeguards — “that is, no self-listing,” he explained.

Now, after allowing the exchanges to cross-list, SEBI can very well consider allowing the bourses to trade on themselves. While listing itself could be done on the other exchange, shares of the exchange could be traded on its own platform too, in the ‘permitted securities’ category, if not for dual listing. Stock exchanges currently trade some stocks listed on other exchanges under this category.

With rival stock exchanges playing the role of primary regulator, there would be no ground to fear first-line regulatory role being compromised.

As suggested by its study ‘Models for self-listing and conflict resolution mechanism’, SEBI could ask the bourses to incorporate a wholly owned subsidiary, which could be entrusted with the role of monitoring the conduct of market users and their compliance with the exchange’s operating rules, and ensuring that sufficient resources are allocated to it to perform its supervisory functions.

High-level panel

The market regulator can also ask the bourses to set up a high-level committee consisting of legal luminaries and eminent chartered accountants for periodical and routine audits, and thus avoid mis-steps.

SEBI can also put in place its own unit to look into the functions of exchanges. This will help it monitor the exchanges directly and step in at the time of conflict.

If dual listing is allowed, exchanges will behave in a more responsible manner. And more importantly from traders’ point of view, dual listing will enhance liquidity in the stock.

Published on January 20, 2017

A letter from the Editor


Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Sincerely,

Support Quality Journalism
This article is closed for comments.
Please Email the Editor

Related

This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.