New norms for 51% sale by SEs soon

Mumbai, Nov 15 | Updated: Nov 16 2005, 05:30am hrs
The Securities and Exchange Board of India (Sebi) has formed a high-powered internal group to draft guidelines on several important issues related to corporatisation and demutualisation (C&D) of stock exchanges. The group will comprise senior officials from the market regulation department and will be headed by executive director Pratip Kar.

Sebi sources said the group will examine how exchanges can divest 51% stake, a pre-condition for all bourses where C&D schemes have been cleared by the regulator.

The group would ensure brokers do not get a stake in divestment. The purpose of C&D would be defeated if brokers get controlling shareholding. The group will ensure there is no conflict of interest, they said.

Meanwhile, Sebi chairman M Damodaran said in New Delhi that shareholding in SEs should be diversified. A majority stake cannot be given to a single investor, more so if its a listed company. It will throw up questions since an SE is the first-level regulator.

Anything as important as an SE cannot fall into wrong hands, he said. The internal group will also suggest ways on how SEs can set up a separate clearing corporation. It is expected the group will also suggest a criteria for selecting a strategic partner in case any SE wants to take up the divestment route. It will also deliberate whether FDI could be allowed.

Sebi officials, however, could not be reached for comment. The process of deliberation and final recommendations of the group are expected to be in place in the next 2-3 months, said sources. The setting up of the panel gains significance in the backdrop of some bourses like the Delhi Stock Exchange planning to induct a strategic partner.