The government will begin tomorrow its consultations with various stakeholders regarding a new set of rules on how stock exchanges should be owned and run, proposed by a Sebi-appointed committee last year. Besides the exchanges, new ownership and governance rules have also been proposed by the committee, chaired by former RBI Governor Bimal Jalan, for other market infrastructure institutions like depositories and clearing corporations.

After Sebi sought the government’s stand on the proposals made by the Jalan panel in this regard, a committee has been set up with representation from the Ministry of Corporate Affairs, stock exchanges and industry bodies among others to study the proposed rules and suggest necessary changes.

The new panel may begin its consultations tomorrow and would look to give its final recommendations by the next month, one of its members said.

Chaired by Renuka Kumar, Joint Secretary in the Ministry of Corporate Affairs, the panel will have representatives from stock exchanges NSE and BSE, industry chambers, depositories NSDL and CDSL, as also accounting bodies like ICAI.

The two new bourses, United Stock Exchange and MCX Stock Exchange, are also said to have been invited to nominate their members to the panel, but it could not be ascertained whether they have joined the committee.

The implementation of the recommendations made by the Jalan panel has been pending for many months now.

The panel has suggested sweeping changes in the way stock exchanges are owned and function and strongly recommended capping their profitability and not allowing them to get listed to safeguard their front-line regulatory role.

The proposals generated intense debate and opposition has been raised to various proposals including non-listing of bourses and cap on profitability, terming them as measures that would push the investors away.

Sebi had set up in January 2010 this committee for review of ownership and governance norms for market infrastructure institutions such as stock exchanges and the panel submitted its report to the regulator in November last year.

Sebi had made the recommendations public on November 23, 2010 and invited public comments on the same till December 31.

In the wake of stiff opposition to the proposals, Sebi later put the ball in the government’s court on implementing these proposals.

Sebi has now decided to take the proposals to its board only after hearing the final word from the union government.

‘Review of ownership and governance of Market Infrastructure Institutions (MIIs)’ has been still listed as one of the priority areas by Sebi among the steps it aims to take during the current fiscal towards “administering, supervising and inspecting” of these entities.

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June 2021