The board of stock market regulator,the Securities and Exchange Board of India (Sebi),is scheduled to meet on April 2 to discuss and finalise its views on the regulation of market infrastructure institutions such as stock exchanges,clearing corporations and depositories.
The regulator had set up a committee under former RBI governor Bimal Jalan to review the ownership and governance norms in these institutions. The committee submitted its recommendations to Sebi in November 2010. The report,which came under criticism from stock exchanges and industry bodies,recommended that exchanges be barred from listing for five years,ownership be restricted to 5 per cent by a single promoter and profits be capped. Besides,it had also advocated segregation of the commercial and regulatory arms of the exchanges.
According to sources in the government,the finance ministry will firm up its views on the issue of listing of stock exchanges by Saturday. Though the ministry has,in principle,agreed to segregation,it is yet to finalise the process to be adopted. Further,the ministry listing be accompanied with segregation of the commercial and regulatory functions of the exchanges,the sources said.
The Sebi board will also discuss who will regulate stock exchanges post listing.
The Jalan committees recommendations had created strong and divergent views amongst the stakeholders. While the exchanges were opposed to the committees view that exchanges be barred from listing,there was a difference of opinion even on segregation of regulatory and commercial roles. Many stakeholders even suggested that the committees recommendations be scrapped.
The ministry of corporate affairs,that has a representative on the Sebi board,has favoured listing of stock exchanges and has supported the idea of segregating commercial and regulatory arms,the sources said. It has also proposed that the listing can happen either prior to or simultaneously with segregation.
It had last year set up a 15-member committee to discuss issues touched upon by the Jalan committee including listing of exchanges,segregation of commercial and regulatory functions of an exchange,and shareholding pattern of exchanges.
It will also discuss new regulations for alternative investment funds,that would help raise capital from a number of high networth investors (HNIs) to be invested in accordance with a defined investment policy. The funds include Venture Capital Funds,Private Investment in Public Enterprises (PIPE) Funds,Private Equity Funds,Debt Funds,Infrastructure Equity Fund,Real Estate Fund,SME Fund among others. However,these do not include collective investment scheme (CIS),mutual funds,Hindu undivided family,and trust. The funds included have to be registered with Sebi and could be formed as companies,trusts or body corporate including LLP structure.
The regulations would require that the fund manager company or trustees of the fund be specified,and change of such entities be reported to the regulator. At the time of application,the fund would specify the category under which it is seeking registration,the targeted size of the proposed fund and its life cycle and the target investor.