Stock Exchanges

Topics: Stock exchange, Stock market, Economics Pages: 76 (21047 words) Published: July 22, 2013
Securities and Exchange Board of India

Report of the Committee on 'Review of Ownership and Governance of Market Infrastructure Institutions'

November 2010

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Securities and Exchange Board of India

Contents

CHAPTER

Page. No

Background ………………………………………………………... 3 1. 2. 3. 4. 5. Introduction ……………………………………………………… .. 6 Ownership norms ……………………………………………... 33

Governance norms ……………………………………………… .. 51 Measures for conflicts resolution ……………………………….. 57 Other issues ………………………………………………………. 61

Annexures A - Sample Questionnaire B - Number of responses received C - Shareholding restrictions in select countries D - Details of shareholding in select countries E - Abbreviations Endnotes

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Securities and Exchange Board of India

Background
The Securities and Exchange Board of India constituted a Committee under the Chairmanship of Dr. Bimal Jalan, (Former Governor, Reserve Bank of India) to examine issues arising from the ownership and governance of Market Infrastructure Institutions (MIIs). The other members of the Committee were: a. Dr. K.P. Krishnan, Joint Secretary, Ministry of Finance Secretary (till June 30, 2010), Secretary, Economic Advisory Council to the Prime Minister of India (from July 1, 2010) b. Shri. Kishor Chaukar, Managing Director, Tata Industries c. Shri. Uday Kotak, Managing Director, Kotak Mahindra Bank Ltd d. Prof. G. Sethu, Officer on Special Duty, National Institute of Securities Markets e. Dr. K. M. Abraham, Whole Time Member, SEBI f. Shri J.N. Gupta, Executive Director, SEBI (Member Secretary).

Under the terms of reference, the Committee needed to review and make recommendations on the following issues: a. Ownership structure of stock exchanges and clearing corporations b. Board composition of stock exchanges and clearing corporations c. Listing and governance of stock exchanges and clearing corporations d. Balance between regulatory and business functions of stock exchanges and clearing corporations, with reference to their ‘for profit’ status e. Relationship between stock exchanges and clearing corporations f. Relationship between stock exchanges and technology providers, and g. Competition policy for stock exchanges and clearing corporations

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Securities and Exchange Board of India Since Depositories form an important part of securities market infrastructure, subsequently, Depositories were included under the scope of the Committee. Methodology The committee examined the overall evolution of Indian markets over the years and noted that Indian markets have progressed and responded to its specific needs and socio–economic demands; in addition, there has been a commensurate development in the regulatory framework in line with this evolution. The committee noted that each market has its unique characteristics and Indian markets are no exception and they too have undergone significant changes over the years. This process has also encompassed changes inter-alia in ownership and governance norms of the MIIs. However, the committee recognised that participation and contribution from all stakeholders has almost invariably preceded any successful change.

Therefore, the Committee decided to adopt a consultative approach to have the benefit of views of all the stakeholders, viz. market infrastructure institutions (MII), market participants, shareholders of MIIs, industry associations, investors and general public, on the relevant issues. Accordingly, a consultative subcommittee was formed which sought comments of stakeholders by sending them a questionnaire (Annexure – A to this report). placed on SEBI’s website. This questionnaire was also

Subsequently, this sub-committee also held discussions with representatives of NSE, BSE, MCX-SX, NSDL, CDSL, ANMI, BSE Broker Forum, DPAI, LIC, UBS, Deloitte, Financial Technologies and others. The consolidated views of the MIIs and various stakeholders were placed for deliberation before the Committee. The responses received...
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