New Delhi: The Securities and Exchange Board of India (SEBI) has proposed reforms aimed at diversifying the ownership of clearing corporations (CCs), currently wholly-owned subsidiaries of stock exchanges.
The move seeks to address potential conflicts of interest and ensure fair and independent functioning of CCs within the capital markets ecosystem.
In its consultation paper, SEBI highlighted that while CCs are prohibited from public listing, their parent exchanges, which are publicly traded, indirectly expose CCs to market pressures. To mitigate this, SEBI has outlined two approaches:
Pro-rata distribution
Initially, 49 per cent of CC shares would be distributed pro-rata among existing shareholders of the parent exchange, with the remaining 51 per cent retained by the parent exchange. The parent would then have up to five years to reduce its stake to 15 per cent or less, selling shares to other exchanges. This would maintain alignment with Stock Exchanges and Clearing Corporations (SECC) norms while broadening ownership.
Full Share Allotment:
Alternatively, CC shares could be fully allocated to shareholders of the parent exchange, breaking the corporate linkage entirely. Shareholders would be allowed to freely trade CC shares, ensuring fair treatment of parent exchange investors.
SEBI emphasised that CCs should continue to operate as non-listed entities and as profit-making public utilities, prioritising investments in technology, infrastructure, and risk management. Fee structures should remain investor-friendly without increasing costs.
Further recommendations include encouraging the establishment of multi-asset CCs and ensuring the presence of multiple CCs to enhance systemic resilience and reduce dependency on a single entity.
Jyoti Prakash Gadia, Managing Director at Resurgent India, commended SEBI’s focus on reducing conflicts of interest while supporting the independent functioning of CCs amidst the growth of capital markets.
SEBI has invited public feedback on these proposals, with comments open until December 13.
