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BSE Seeks Simpler Norms for Bourses Going Public

Seeking simpler norms for listing of bourses, BSE has suggested that the government exempt them from tougher regulations applicable to corporate entities going public.

New Delhi: Seeking simpler norms for listing of bourses, BSE has suggested that the government exempt them from tougher regulations applicable to corporate entities going public.

As functions of stock exchanges are different from those of corporates, they should not be subjected to the regulations which apply to other entities when they apply for listing, BSE says.

BSE, which itself is planning to list its securities on the capital markets, is believed to have made these submissions to Finance Ministry in its budget wish-list. Rival National Stock Exchange or NSE also has plans to get listed.

Under the current norms by the Securities and Exchange Board of India (Sebi) for 'Stock Exchanges and Clearing Corporations', a bourse can apply for listing of its securities on any recognised stock exchange, other than itself and its associated exchange.

Further, the stock exchanges are required to maintain at least 51 per cent of their shareholding with the "public".

In the case of an exchange, the term "public" includes any member or section other than trading member or clearing member or their associates and agents.

Listing of exchanges can lead to better corporate governances and increased foreign inflows in Indian capital markets, while providing an increased perception of safety in the eyes of the global players, according to BSE.

Globally, various bourses like Nasdaq-OMX, Hong Kong Exchanges and Intercontinental Exchanges are listed either through their holding companies or directly.

This has helped bring more transparency in their respective markets resulting in greater participation by investors.

In 2012, capital markets regulator Sebi had allowed over three years old stock exchanges to list their own shares through IPO. Under Sebi's guidelines, stock exchanges should have a minimum net worth of Rs 100 crore and the existing stock exchanges are given 3 years to achieve threshold capital base.

Moreover, to enhance Indian securities market's competitiveness globally, BSE is understood to have suggested that government allow leading global bourses to hold up to 15 per cent stake in domestic exchanges.

Currently, the government policy permits foreign bourses to own a maximum of 5 per cent stake in Indian exchanges. Without the potential for a meaningful investment stake, foreign partners are reluctant to engage fully because there is inadequate skin in the game, according to BSE.

While the current policy on ownership of stock exchanges does not preclude a strategic partnership between an Indian and a foreign exchange, the 5 per cent cap does make such a partnership difficult, BSE suggested.

It wants the current policy on ownership of stock exchanges to be amended to allow for an investment stake of 15 per cent for foreign exchanges of international repute in Indian exchanges which have had operations for over 20 years.

As per BSE, the proposed hike in foreign investment limit would help in increasing foreign direct investment (FDI) in India as well bring in best technology and market practices from around the globe.

Besides, presence of internationally acclaimed exchange groups in a substantive manner in the shareholding of Indian exchanges would also increase the visibility of Indian bourses in the international community, it suggested.

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