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MUMBAI, Aug. 30

IN an effort to utilise the infrastructure of regional stock exchanges, a SEBI group has suggested that some of the smaller stock exchanges could explore the possibility of merger on the lines of the `Euronext' model.

Euronext is the stock exchange formed after the merger of the stock exchanges of Paris, Brussels and Amsterdam.

However, the group on `Corporatisation & demutualisation of stock exchanges' headed by the former Chief Justice of India, Mr M Kania, has not recommended any specific route as being mandatory and said the choice should be dictated by commercial considerations.

The group felt that if Euronext can be formed after the merger of three stock exchanges in different regulatory regimes, such merger could be explored even in India by some stock exchanges.

The merger can be done to provide avenues for medium-size companies to get listed on these stock exchange and utilise the existing IT infrastructure put in place by these regional stock exchanges.

In case the stock exchanges adopt the Euronext model, SEBI will have to work out the eligibility criteria for the brokers, model rules and by-laws for such stock exchange. In addition, there should be a single order book and setting up of a single clearing corporation at the national level.

The Inter-Connected Stock Exchange of India (ICSEI) had attempted such an exercise but could not succeed mainly because the orderbook remained split between the stock exchanges which are the 14 constituent stock exchanges of ICSEI.

The group said that a demutualised stock exchange can make issue of shares to the public and list its shares on itself or on any other stock exchange. However, listing is not mandatory for the stock exchanges.

Globally, a number of stock exchanges are listed on their own exchanges.

Countries where such phenomenon is present are - Australia, Hong Kong, Singapore, Canada, the UK and Sweden.

In order to disperse the shareholding of the demutalised exchange, no specific form of dispersal is prescribed by the group.

But it suggested that in three years, which can be extended by a further maximum period of two years, at least 51 per cent of the shares should be held by non-trading members of the stock exchange.

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