Sebi gives conditional nod for listing of shares by stock exchanges

Capital market regulator Securities and Exchange Board of India (Sebi) decided to allow stock exchanges to list themselves, paving the way for corporatising BSE Ltd and the National Stock Exchange (NSE) to make initial public offers.

Sebi meeting on Monday considered the proposal to facilitate listing of stock exchanges by placing certain safeguards and procedures with respect to shareholding norms, fit and proper criteria, and other issues of conflict of interest; thereby ensuring compliance with the ownership and governance norms as provided in Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012

The approval for listing is subject to stock exchanges ensuring compliance with the SECC Regulations, 2012, which include maintaining 51 per cent shareholding of public category and ensuring that holding of trading members/ associates/ agents does not exceed 49 per cent and putting in place a mechanism providing for approval of the listed stock exchange as and when holding of trading members/associates/agents reaches a limit of 45 per cent.

The exchanges will have to ensure compliance that every shareholder be fit and proper - each applicant will be required to make declaration to this effect at the time of making application during IPO/OFS.

Sebi will also issue necessary procedures to ensure compliance of the provisions post listing.

The board also considered the recommendations of the committee on the viability of introducing a single clearing corporation or interoperability between different CCs.

The committee had, inter alia, recommended against the idea of a single clearing corporation and felt that the question of interoperability of clearing corporations can be looked into at a future date.

Sebi also considered transfer of profits every year by the recognised stock exchanges to the fund of recognised clearing corporation.

Stock exchanges have long sought regulatory approval to sell shares publicly. However, the lack of a formal process for stock exchange listing had made the task difficult.

BSE, whose stakeholders include Singapore Exchange Ltd (SGXL.SI), Deutsche Boerse AG (DB1Gn.DE) and billionaire George Soros, has been working with the regulator for an IPO since 2013.

NSE, which counts Tiger Global Holdings and Goldman Sachs as investors, has also in the past expressed interest in going public.

The Sebi decision comes after the last board meeting of the year, in which the regulator also approved starting a public consultation for rules governing issuance of green bonds.

Sebi also said it is working on setting up an electronic platform for primary issuance of debt securities in a bid to boost market activity.