The Securities and Exchange Board of India (SEBI) on November 22, 224, issued the Consultation Paper on Review of Ownership and Economic Structure of Clearing Corporations.
The following has been stated namely: -
• To ensure that Clearing Corporations (CCs) discharge their vital function of risk management independently and in the best public interest, and to strengthen the systemic stability of the Market Infrastructure Institution (MII) ecosystem, this consultation paper seeks public opinion on a proposal to, inter-alia, diversify the ownership in CCs operating in equity markets.
• The proposals under discussion involve the regulatory framework for SEBI-regulated Clearing Corporations (CCs). Key points include:
o Diversification of Shareholding: If the PSS Act doesn't apply to SEBI-regulated CCs, their shareholding may be fully diversified, removing Stock Exchanges’ ownership. If the PSS Act applies and Exchange shareholding falls below 51%, 49% of the CC’s shares would be diversified, with the parent Exchange reducing its stake to 15% within 5 years.
o Pro-rata Distribution: Shareholding in Clearing Corporations may be distributed pro-rata to the shareholders of the parent Exchange.
o Profit-Making Public Utilities: CCs would continue as profit-making public utilities under SEBI’s regulation, with a sustainable fee structure ensuring no increased costs for end investors.
o Listing Restrictions: CCs will remain prohibited from listing on stock exchanges.
o Multi-Asset Clearing Corporations: The creation of multi-asset CCs, providing services across different asset classes and Exchanges, would be encouraged.
o Multiple Clearing Corporations: Despite consolidation efforts, multiple CCs will continue to operate in India. Public comments are being sought on these proposals.
• Comments may be sent by December 13, 2024 on https://www.sebi.gov.in/sebiweb/publiccommentv2/PublicCommentAction.do?doPublicComm
