Sebi drops plan for central listing body
The market watch-dog’s move to put in place a system to ensure only quality companies got listed did not take off as the Centre felt it was not necessary.
The Securities & Exchange Board of India (Sebi) has shelved the plan to set up a Central Listing Authority that was supposed to ensure that only quality companies get listed on stock exchanges.
Actually, Sebi had gone ahead with the idea some three years ago and tried to formally set up the authority by appointing a chief executive. However, the idea never came through and just got discarded, according to sources.
As per the brief prepared by Sebi the central listing authority was expected to “set, enforce and continuously upgrade the disclosure and listing standards for the healthy development of the capital markets.” Incidentally, It was expected to encourage the new issuances and listing of securities in a time-bound manner.
It would also make efforts to prevent undeserving persons from tapping the public resources and listing securities, which are detrimental to the interest of investors, the brief had said.
However, according to sources, there were two reasons that the authority never came into being. The first being that it could not be finalised whether the authority should be at par with Sebi or work under Sebi.
Given the possible composition of people working in the authority, it would have been difficult to make it below the level of Sebi.
One other reason cited was that the central government took a view that there was no reason to set up the listing authority as the country’s stock exchanges themselves should be asked to do due delligence before allowing listing of any company.
However, as another source pointed out if there was to be such a authority, it would have ensured that large number of small companies on the Bombay Stock Exchange would not be around as many of them are there due to legacy and following old rules of listing.
Incidentally, it may be pointed out that these very companies which saw massive price manipulation recently that attracted the ire of the government.
The Securities & Exchange Board of India (Sebi) has shelved the plan to set up a Central Listing Authority that was supposed to ensure that only quality companies get listed on stock exchanges.
Actually, Sebi had gone ahead with the idea some three years ago and tried to formally set up the authority by appointing a chief executive. However, the idea never came through and just got discarded, according to sources.
As per the brief prepared by Sebi the central listing authority was expected to “set, enforce and continuously upgrade the disclosure and listing standards for the healthy development of the capital markets.” Incidentally, It was expected to encourage the new issuances and listing of securities in a time-bound manner.
It would also make efforts to prevent undeserving persons from tapping the public resources and listing securities, which are detrimental to the interest of investors, the brief had said.
However, according to sources, there were two reasons that the authority never came into being. The first being that it could not be finalised whether the authority should be at par with Sebi or work under Sebi.
Given the possible composition of people working in the authority, it would have been difficult to make it below the level of Sebi.
One other reason cited was that the central government took a view that there was no reason to set up the listing authority as the country’s stock exchanges themselves should be asked to do due delligence before allowing listing of any company.
However, as another source pointed out if there was to be such a authority, it would have ensured that large number of small companies on the Bombay Stock Exchange would not be around as many of them are there due to legacy and following old rules of listing.
Incidentally, it may be pointed out that these very companies which saw massive price manipulation recently that attracted the ire of the government.
posted by Sensex-Blog Admin at 12:52 AM
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