Government finalising FDI norms for stock exchanges

Mumbai: The government will take a final decision on foreign direct investment (FDI) in stock exchanges within the next 10 days. The policy would make it clear if bourses can invite FDI while divesting brokers' equity in them to below 49 per cent in line with Sebi guidelines on demutualisation, finance ministry sources said.

The need for an FDI policy on stock exchanges was felt after the corporatisation of bourses. Earlier, most stock exchanges were not companies but associations of persons as traders held equity in the bourses. Since the government has now made it mandatory for all the bourses to corporatise and demutualise, an FDI policy has become inevitable, the officials said.

The move should also be seen in the light of NASDAQ expressing keenness to pick up a stake in the Bombay Stock Exchange (BSE).

The finance ministry had already held two rounds of discussion with RBI officials, including governor Y V Reddy. The ministry is planning another round of talks with Sebi chairman M Damodaran in the next 2-3 days, the officials said.

While the finance ministry will give inputs, the commerce ministry will frame the FDI policy and government expects to finalise the policy on FDI in bourses within the next 10 days.