The Hindu Business Line : Listing authority must come under SEBI: Panel

THE Securities and Exchange Board of India (SEBI) Committee on delisting is of the view that the proposed Central listing authority (CLA) should be set up under the aegis of SEBI. The committee has also held that the CLA should derive its powers from SEBI Act or its regulations.

This view of the committee is at variance with the position taken by the SEBI Chairman, Mr G.N. Bajpai, who held that the proposed CLA should not be part of SEBI. He had recently stated that CLA should not adopt the UK model, on this issue, where the National Listing Authority (NLA) is part of the regulatory body (Financial Services Authority).

In its first report, the committee has taken a position that CLA will be accountable to SEBI and should provide a quarterly report on their activities. "SEBI would periodically review the performance and working of CLA based on the reports and may reconstitute the CLA as and when necessary'', the report said.

Interestingly, the committee has refrained from taking a position on whether the role of CLA should include post-listing monitoring and compliance with the listing agreement. "It is up to SEBI to expand the scope of CLA to include monitoring and compliance with the listing agreement at later date'', the report said.

The initial role of CLA, as suggested by the committee, is being confined to scrutinising listing agreements and reviewing the provisions of listing agreement from time to time. It will also ensure uniformity in the exercise of due-diligence in scrutinising listing applications.

The decision of SEBI on the role of CLA in post-listing monitoring and compliance with the listing agreement has a direct bearing on the future of small and regional stock exchanges in the country.

To the advantage of these exchanges, the SEBI Chairman had in June 2002 taken a position that the post-listing monitoring should be done by the exchanges and not by the CLA. He had also said that compliance with the listing agreement should continue to be handled by the exchange where the company is listed.

Mr Bajpai had said that the CLA could be a mid-path between the National Listing Authority of UK and the current system that exists in India. In the UK, the National Listing Authority lays down the listing requirement, conducts due diligence for listing, post-listing monitoring and also compliance.

A Senior Finance Ministry official had, however, recently expressed a view that creation of CLA would help in post-listing monitoring, which has been quite weak in India. The official had taken a position that CLA should undertake post-listing monitoring and the Authority should not be independent of SEBI.

The official also held that a hybrid system of having both compulsory listing in regional stock exchange and also a CLA would not send the right signals to different stakeholders in the capital market and this may even lead to confusion.

Send this article to Friends by E-Mail

Stories in this Section
PNB allowed to continue operations of MF arm

Listing authority must come under SEBI: Panel

JPC may seek `lead' market regulator