In a somewhat unconventional order, SEBI has on April 20, 2010 issued “advisory instructions” in a matter involving the Bombay Stock Exchange Limited (“BSE”). It arises out of a letter by the BSE to SEBI dated July 2, 2004 containing a proposal to introduce a market making scheme in the derivatives segment of the exchange. A unique feature of the scheme proposed by BSE was that it would reimburse...
Multiplicity of Stock Exchanges
Usually, stocks are listed on one major stock exchange in a given jurisdiction. For example, a U.S. stock will be listed either on the NYSE or NASDAQ. But, the position in India is different, perhaps for historical and other reasons, where not only there are multiple stock exchanges, but a number of companies are listed on more than one such exchange. In an interesting column in the Business...
Consequences of Listing Violations
One of the usual consequences that befalls a company when it violates conditions of the listing agreement is a delisting of its shares from the stock exchanges. This is perceived to be a disincentive that deters companies from breaching listing conditions. It has recently been put to use in a more mild form by the Bombay Stock Exchange that threaten to suspend 18 companies for non-compliance of...
Corporate Bonds: Clearing and Settlement
SEBI last week issued a circular prescribing the procedure for clearing and settlement of corporate bonds. This is an important step in the development of a robust corporate bond market that has not yet fully evolved in India, and appears to have been welcomed by the markets.
The SEBI Updates blog has a post describing the history of regulation of the Indian corporate bond markets.
Regulation of Stock Exchanges
The proposed establishment of a new stock exchange in India has caused a revival of the debate pertaining to regulation of stock exchanges. There are unique issues: stock exchanges are not only profit-making institutions that are companies in form and substance, but they also carry out a regulatory role in respect of companies that are listed on them. This creates an inherent conflict of interest...
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