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

Comments

Popular posts from this blog

At 18%, GST Rate to be Less Taxing for Most Goods

About 70% of all goods and some consumer durables likely to cost less

A number of goods such as cosmetics, shaving creams, shampoo, toothpaste, soap, plastics, paints and some consumer durables could become cheaper under the proposed goods and services tax (GST) regime as most items are likely to be subject to the rate of 18% rather than the higher one of 28%.

India is likely to rely on the effective tax rate currently applicable on a commodity to get a fix on the GST slab, said a government official, allowing most goods to make it to the lower bracket.

For instance, if an item comes within the 12% excise slab but the effective tax is 8% due to abatement, then the latter will be considered for GST fitment.

Going by this formulation, about 70% of all goods could fall in the 18% bracket.

The GST Council has finalised a four-tier tax structure of 5%, 12%, 18% and 28% but has left room for the highest slab to be pegged at 40%. A committee of officials will work out the fitment and the council…

Firms with sales below Rs.50 crore out of ambit

The tax department has reiterated that the PoEM rules, which require foreign firms to pay taxes in India if the effective control is here, will not apply to companies withaturnover of Rs.50 crore or less inafinancial year. Last month, the tax department had come out with the longawaited Place of Effective Management (PoEM) rules, which require foreign companies in India and Indian firms with overseas subsidiaries to pay local taxes if their businesses are effectively controlled by Indians. Then the rules did not setathreshold above which they were to apply. However, the accompanying press release states that the rules will not apply to companies withaturnover of up to Rs.50 crore inayear. That created confusion whether the threshold will be adhered to. Inacircular to clarify things, the Central Board of Direct Taxes (CBDT) said the provision "shall not apply toacompany havingaturnover or gross receipts of ~50 crore or less inafinancial year".

PoEM rules essentially target shell …