The Hindu : Central Listing Authority on anvil

Online edition of India's National Newspaper
Wednesday, Dec 04, 2002

Business

Business

Central Listing Authority on anvil

By Our Special Correspondent

NEW DELHI DEC. 3. The Securities and Exchange Board of India (SEBI) plans to go ahead with demutualisation of bourses and establishment of a Central Listing Authority (CLA) this fiscal itself.

Indicating this today, the SEBI Chief, G. N. Bajpai, said the Kania Committee report on demutualisation of bourses has been accepted. "We will review it within this fiscal" for implementation.

Mr. Bajpai, who addressed the FICCI seminar on `Corporate Governance', also allayed fears about the closure of regional loss-making bourses and said that it was now up to them to adopt the appropriate model for corporatisation of exchanges.

Only last week, the SEBI board had approved the Kania Committee report. In the light of these developments, some of the local exchanges like Delhi Stock Exchange are learnt to be preparing the draft and would submit their plans within two months.

According to Mr. Bajpai, the proposed Central Listing Authority should also come in to existence this fiscal.

The authority would have representation from the regional bourses as well. This move follows listing of dubious companies in smaller exchanges taking advantage of slack listing criteria.

One of the major jobs of the CLA would be to frame uniform criteria for listing for companies to prevent unscrupulous promoters from entering the capital market through smaller exchanges.

The Government is to introduce legislations on corporatisation of bourses along with addressing other issues relating to taxation of their income and surplus.

On reduction in the limit for investment in derivative instruments, Mr. Bajpai said the regulator has recommended that it be lowered to Rs. 1 lakh instead of the present limit of Rs. 2 lakhs.

However, the changes have to be carried out by the Government, he further said adding that "we have referred it to the Standing Committee on Finance".

So far as inclusion of more scrips for futures and options are concerned, he said the regulator had given the freedom to bourses to select the top 500 scrips and recommend for their deferral product.

He said good corporate governance was indispensable for resilient and vibrant markets and as such it was an important instruments of investor protection.

Therefore, it should not be limited to mechanisms for monitoring of management by the board and monitoring of the board by shareholders.

"Effective disclosures and monitoring will encourage management to pursue policies that provide competitive returns to shareholders," he asserted.

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