A proposal for diversified ownership of equities clearing corporations (CCs), which are currently entirely controlled by stock exchanges, was made by the Securities and Exchange Board of India (SEBI).
To ensure that clearing corporations may function primarily in the public interest and not for commercial reasons, SEBI anticipates that their ownership will be broad-based and diverse.
“CCs need to be, and need to be seen to be, truly independent of exchanges particularly in such interoperable segments, so that there is a level playing field across MIIs with no perception of any perverse conflict of interest,” SEBI said in a draft paper, inviting public comments by December 13.
The first option proposed by the regulator would allow current exchange owners to directly own 49% of the clearing firm, with the parent exchange initially holding 51%. Eventually, the exchange may be forced to reduce its holdings to 15%.
Another option is for exchange shareholders to directly own all of the stock, in which case they would have the freedom to swap their shares in the CC. According to SEBI, this would enable the CC to separate from its parent exchange in a way that is equitable to the parent exchange’s current owners.
Additionally, SEBI has recommended adjustments to CCs’ profit and dividend distribution. Additionally, the regulator wants CCs to be consolidated.
It has insisted, meanwhile, that CCs will not be permitted to list on exchanges, upholding the current standard and limiting their listing.
