SEBI moots entry norms to set up stock exchanges

News: Securities and Exchange Board of India (SEBI) has proposed a new framework for ownership of Market Infrastructure Institutions(MII) to facilitate new entrants to set up stock exchanges and depositories.

Facts:

• What is Market Infrastructure? It is a system administered by a public organisation or other public instrumentality, or a private and regulated association or entity, that provides services to the financial industry for trading, clearing and settlement, matching of financial transactions and depository functions.
• Examples: Examples of MIIs include stock exchanges, depositories and clearing corporations. These are systemically important institutions whose failure could lead to bigger cataclysmic collapses bringing down the economy.

Key Proposals:

• A resident promoter setting up an MII may hold up to 100% shareholding, which will be brought down to not more than (either 51% or 26%) in 10 years.
• A foreign promoter from Financial Action Task Force FATF member jurisdictions setting up an MII may hold up to 49% shareholding, which shall be brought down to not more than (either 26% or 15%) in 10 years.
• Foreign individuals or entities from other than FATF member jurisdictions may acquire or hold up to 10% in an MII.
• Any person other than the promoter may acquire or hold less than 25% shareholding.
• At least 50% of ownership of the MII may be represented by individuals or entities with experience of five years or more in the areas of capital markets or technology related to financial services.

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