Stock exchanges can now look forward to a new set of investors?foreign institutional investors (FIIs). The government has now clarified the stance and mentioned that FIIs can now also invest in stock exchanges that are not listed. Both the primer exchanges BSE and NSE are corporate bodies that are not listed at the moment.
A Securities & Exchange Board of India?s (Sebi) circular states, ?In respect of exchanges that are not listed, FIIs purchase of shares of such exchanges can be through transactions outside of the exchange provided it is not an initial allotment.?
This means that exchanges like the BSE and NSE, which have already allotted shares to strategic investors and individuals, can now allot shares to FIIs as well. This will have to be done through an off market transaction. ?However, if the exchange is listed, transactions by FIIs should be done through the exchange,? the Sebi note added.
Earlier on December 22, 2006, when the policy decision of the government of India regarding foreign investments in infrastructure companies in securities markets like . stock exchanges, depositories and clearing corporations, was communicated it prescribed that FII will be allowed only through purchases in the secondary market. The exchanges had then made a representation to the government to clarify and expand the scope of FII investment.
However, the investment limit for each FII will remain at the 5% levels as prescribed by Sebi. Earlier, the regulator had eased the norms from 5% to 15% for strategic or ?anchor? investors. BSE has Deutsche Borse and Singapore Stock Exchange and the NSE has NYSE as strategic investors.
Earlier, BSE had approached the regulator seeking direct listing on the exchange foregoing the initial public offer (IPO) route under section 192B of the SCRA Act.