The SEBI Board in its meeting held on April 2, 2012, decided on the ‘Ownership and Governance norms for Market Infrastructure Institutions’.

Based on the Board decisions, the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012, (SECC) have been notified on June 20, 2012 to regulate recognition, ownership and governance in stock exchanges and clearing corporations.

In addition, SEBI is separately in the process of formulating guidelines and procedures to give effect to other Board decisions taken on April 2, 2012 and to specify norms as required in the above Regulations, inter-alia:-

  1. For regulating the conflicts of interests in market infrastructure institutions, SEBI, is in the process of formulating the following:-

a. Minimum listing standards:-  SEBI shall separately prescribe minimum listing standards for listing of companies on stock exchanges. However, the stock exchanges can prescribe more stringent norms, if they so desire.

b.   Conflicts Resolution Committee: A Conflicts Resolution Committee (CRC) shall be formed by SEBI with majority external and independent members to deal with all issues concerning Conflicts of Interest. The CRC will consider matters of policy, guidelines involving conflict issues and recommend standards that are pertinent to the areas of potential conflict in the Exchanges. Further, issues of conflict will be referred by Exchanges or may be taken up suo moto by the CRC. The independent oversight committees of the Exchanges for member regulation, listing functions, and trading and surveillance function, shall have a regular interaction with the CRC.

c.  Expert Committee to examine certain issues relating to clearing corporations:- An expert Committee is being formed to look inter alia into the following issues:-

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i.    To assess the feasibility of a single clearing corporation or interoperability among multiple clearing corporations and the operational aspects of the same.

ii.    To frame norms for utilization of profits and investments by recognised clearing corporations.

iii.    To look into the norms for adequacy of the core corpus of the SGF/TGF and its sourcing, including transfer of profits by stock exchanges to the SGF/TGF in the long run.

2.  Procedural aspects – The procedural aspects involved in implementing the SECC Regulations including detailed compensation norms for key management personnel of stock exchanges and clearing corporations, statutory committees for clearing corporations etc., are being issued by way of a Circular.

3.    Categorisation of banks as ‘public’:- At the time of permitting trading in exchange traded currency derivatives, banks were permitted in consultation with RBI, to become trading members directly in the currency segment of the stock exchange. In view of the implications with respect to the provisions of SCRA and decisions taken in the Board, SEBI is taking up the matter with the Government to appropriately amend the SCRA. Till such amendment or a period of three years, whichever is earlier, the current position will continue.

4.  Amendments to Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996 (D&P):- Depositories also being market infrastructure institutions, the necessary amendments to SEBI (D&P) Regulations are also being separately carried out which will cover the ownership and governance norms for Depositories.

Mumbai

June 21, 2012

PR No. 66/2012

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