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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.
