Asked by the government for suggestions on a new set of rules for ownership and governance of the stock exchanges, the industry has favoured listing of the bourses.However, there is no unanimity among the industry bodies and the exchanges themselves on how to segregate the regulatory and commercial roles of stock exchanges.

Industry chambers Assocham, Ficci and MCX-SX have favoured listing of the stock exchanges, while NSE is of the view that listing should be allowed only after segregation of the regulatory and commercial roles of bourses.

On May 23, the Corporate Affairs Ministry had held consultations with the representatives of stock exchanges, industry chambers, accounting bodies and other stakeholders on the new rules. It had sought a roadmap by May 30 for segregation of the regulatory and commercial roles of the bourses.

A Sebi-appointed committee chaired by former RBI Governor Bimal Jalan had suggested last year sweeping changes in the way stock exchanges are owned and ru

n and strongly recommended capping their profitability and not allowing them to get listed to safeguard their front-line regulatory role.However, the proposals met with stiff resistance and Sebi sought the government’s suggestion before implementing them.

Subsequently, the Ministry of Corporate Affairs set up a committee under Joint Secretary Renuka Kumar to discuss the Jalan panel’s recommendations with stakeholders.

According to sources, Ficci has suggested that listing of the bourses should be allowed, as the process of segregation would take time. Assocham, too, has favoured listing and feels that segregation should be gradual and done over a period of time.

In its response, the NSE pointed out that there is an inherent conflict of interest in an exchange between the regulatory and commercial roles and this gets increased or exacerbated if you list an exchange, they added.

“NSE has recommended that segregation is a must before listing,” a source said.

Implementation of the Jalan Committee’s recommendations has been pending for many months now.

The committee, set up in January, 2010, to review the ownership and governance norms for market infrastructure institutions, submitted its report to Sebi in November last year. Sebi invited comments on it till December 31.

The proposals generated intense debate and opposition was raised to proposals like non-listing of bourses and caps on profitability, terming them as anti-investor measures.

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

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June 2021