Skip to main content

Sebi may consider exchanges’ foray into unrelated businesses

Sebi may consider exchanges’ foray into unrelated businesses
A Securities and Exchange Board of India (Sebi) panel headed by R Gandhi, former deputy governor of the Reserve Bank of India, will consider allowing Indian stock exchanges to enter into unrelated businesses, said two persons close to the development. At present, stock exchanges are allowed to provide only trading platform and promote clearing corporation and depositories.
“Exchanges want more sources of income. Now, their revenue is from regulatory function such as listing fees etc.,” said one of the persons mentioned above.“Stock exchanges won’t be able to attract investments from investors if it’s not into other businesses. So, they want to carry out unrelated activity through subsidiaries.”
On October 16, Sebi constituted a committee under Gandhi to review the norms for market infrastructure institutions such as stock exchanges, depositories and clearing corporations.Stock exchanges recently met the panel and sought for change in rules, the two persons said.
Exchanges need Sebi permission to venture into businesses outside its core activity. In the past, when exchanges wanted to do registrar business, they were not allowed.
Globally, exchanges are allowed to venture into new businesses and are not so tightly regulated like in India. They are regulated only for the purpose of the trading platform, while Chinese walls are maintained between other businesses.
“Globally, exchanges store data and disseminate them for research and commercial activity for a fee,” said the second person quoted above.
Sandeep Parekh, founder of Finsec Law Advisors, said: “So long as the other businesses don’t pollute the main exchange activity, it should be fine. Similar principles may not be applied to clearing corporations as it is more sensitive.”
The slew of recommendations by the Bimal Jalan committee on stock exchange reforms in 2012 had asked the regulator to conduct a review of the rules for bourses every five years.
“It’s a totally unexplored area,” said a senior regulatory official familiar with the development. This request was made to the Bimal Jalan committee but then they felt it had to be considered in due time, he said.
A top exchange official said it needed clarity on the definition of what is related and unrelated business. Market participants said exchanges could propose venturing into data analytics business though their usage should be allowed only in select fields.
“Data analytics if it is only for the purpose of securities market should be allowed. But, it should not be sold to consumer companies,” said JN Gupta, a former Sebi executive director and a member of the Jalan committee.
“Exchanges are getting data because of law. It is a regulatory requirement hence it shouldn’t be allowed to be used by them for their commercial purpose or any other purpose unless approval is obtained from
The Economic Times, New Delhi, 4th December 2017


Popular posts from this blog

Shrinking footprints of foreign banks in India

Shrinking footprints of foreign banks in India Foreign banks are increasingly shrinking their presence in India and are also becoming more conservative than private and public sector counterparts. While many of them have sold some of their businesses in India as part of their global strategy, some are trying to keep their core expertise intact. Others are branching out to newer areas to continue business momentum.For example, HSBC and Barclays Bank in India have got out of the retail business, whereas corporate-focused Standard Chartered Bank is now trying to increase its focus on retail “Building a retail franchise is a huge exercise and takes a long time. You cannot afford to lose it,” said Shashank Joshi, Bank of Tokyo-Mitsubishi UFJ’s India head.According to the Reserve Bank of India (RBI) data, foreign banks’ combined loan book shrunk nearly 10 per cent from Rs 3.78 trillion in fiscal 2015-16 to Rs 3.42 trillion last financial year. The banking industry, which includes foreign banks…

GST Refund of Rs 20,000 Cr Pending: Exporters’ Body

GST Refund of Rs  20,000 Cr Pending: Exporters’ Body Refund of over Rs 20,000 crore on account of Goods and Services Tax (GST) is pending with the government with more than half the amount stuck as input tax credit, Federation of Indian Export Organisations said on Tuesday. While claims over Rs7,000 crore were cleared in March, the amount was Rs 1,000 crore in April.However, after exporters’ request, the GST council and tax department are organizing a second phase of Special Refund Fortnight starting May 31, which will enable exporters to draw their refunds at a speedy pace. Many exporters have been unable to file the refund of input tax credit due to technical glitches, exports and claim happened in different months. The major challenge lies on ITC refund especially because the process is partly electronic and partly manual which is cumbersome and add to the transaction cost, the exporters’ body said. On IGST, refunds are getting delayed due to airline and shipping companies not submitt…

RBI rushes in to prop up falling rupee

RBI rushes in to prop up falling rupee India’s central bank reportedly intervened in the currency markets on Monday to prevent a further slide in the local unit, which breached the 67 mark to a dollar for the first time in 15 months amid a widening trade gap and runaway import bills fuelled by high crude-oil prices. Some state-owned banks were seen selling dollars aggressively, interventions that market dealers attributed to the central bank’s strategy to stem the decline of the Indian rupee against the US currency. The rupee is the worst performing among a dozen Asian monetary units in the past three months. It lost 4.25 per cent to the dollar during the period, show data from Bloomberg. On Monday, the Reserve Bank of India (RBI) is said to have sold about Rs 800 million collectively on the spot and exchange traded futures markets, dealers said. An email sent to RBI remained unanswered until the publication of this report. The currency market has seen such a strong central bank interven…