Sebi Extends Deadline for Public Comments on Clearing Corporations Ownership Proposal
The Securities and Exchange Board of India (Sebi) on Friday announced an extension of the deadline for submitting public comments on its proposal to diversify ownership of clearing corporations (CCs) until December 31, 2024. This extension comes after Sebi received several representations from various entities and organizations regarding the initial timeline set for December 13.
In its consultation paper released on November 22, Sebi outlined a review of the ownership and economic structure of clearing corporations, which are presently fully owned subsidiaries of stock exchanges. The regulator emphasized the importance of ensuring that any transition in ownership remains fair to all stakeholders, including current shareholders of the parent exchanges, while minimizing disruption to the capital markets ecosystem.
Sebi’s proposal aims to broaden and diversify the ownership of CCs, which are currently prohibited from publicly listing their shares, even though their parent exchanges are allowed to do so. This situation indirectly exposes clearing corporations to market pressures.
To facilitate this diversification, Sebi suggested several options. One proposed approach is a pro-rata distribution, where 49% of the shareholding of a CC would be allocated to the existing shareholders of the corresponding parent exchange, while the remaining 51% would continue to be held by the parent exchange initially. The exchange would then have a period of five years to reduce its stake to 15% or lower by selling shares to other exchanges, thereby ensuring that CCs remain majority-owned by exchanges in compliance with the Securities Contract (Regulation) Act norms.
Alternatively, Sebi proposed that the entire shareholding of a CC could be allocated to the existing shareholders of the parent exchanges. This option would allow shareholders to freely trade their shares in the CC, providing a clean break from the parent exchange in a manner that respects the interests of existing shareholders.
Additionally, it was reiterated that CCs would continue to be prohibited from listing, maintaining their current structure amid the proposed changes. The consultation paper aims to gather broader perspectives to inform the future direction of ownership structures within India’s clearing corporations.