 "Exchanges await Sebi clarification on 25% profit transfer rule")
Interestingly, the exchanges say they have failed to do so because they are awaiting further clarity from the regulator on the implementation of the new norms which were announced in June last year.
A Securities and Exchange Board of India committee set up to decide on how the transfer is to take place, has already received inputs from exchanges, according to a source.
“The exchanges have given joint inputs to the committee which is supposed to take a call on this, the ball is now in Sebi’s court,” said the person.
An email sent to Sebi did not receive a reply.
The regulations issued on June20,2012, require every recognized stock exchange to transfer twenty five% of its annual profits every year to a fund to guarantee settlement of trades of the recognized clearing corporation which clears and settles trades executed on that stock exchange.
| Time Is Money: The Rs 268 crore wait | ||
| Name of the Exchange | Net Profit For FY13 (Rs crore) | Amt to be transferred if 25% rule applied to net profit (Rs crore) |
| BSE | 171.2 | 42.8 |
| MCX-SX | 21.42 | 5.355 |
| NSE | 877.61 | 219.4025 |
| Total | 1,070.23 | 267,5575 |
| Source: Exchange Financials | ||
| Compiled by Business Standard | ||
“Pending clarification from Sebi regarding the norms for sourcing including transfer of profits by stock exchanges to the above mentioned fund, no transfer of profits has been recorded in the books of account as at March 31, 2013.,” said the BSE financials.
“The company would account it as and when Sebi takes the final decision,” according to MCX-SX.
“Pending the report of the Expert Committee, no transfer of profits to the Settlement Guarantee Fund in terms of The Regulations has been made,” according to a note to the financials of the NSE.
The Sebi Board had decided on the norms for market infrastructure institutions including stock exchanges and clearing corporations in its meeting held on April 2, 2012. It issued a statement on the same in June.
It also set up an expert Committee to examine certain issues relating to clearing corporations including the norms for adequacy of the core corpus of the Settlement Guarantee Fund or the Trade Guarantee Fund . It was also to look into sourcing of the corpus, including through transfer of profits by stock exchanges, according the Sebi note issued in June.
The committee was subsequently set up with members from three exchanges and a representative from Sebi, according to a source. The exchange members have since given their inputs to the regulator. Sebi is set to now decide on the final report, said the person.
It was unclear if the current year’s profits would be transferred retrospectively once the committee makes a decision.
The NSE declined to comment. An email sent to MCX-SX did not receive a reply at the time of writing.
“Once the committee report is available and accepted by Sebi, rules and regulations prepared and published by SEBI in this regard, BSE will implement the recommendations,” said BSE in reply to a request for comment.
The three exchanges have a cumulative profit of Rs.1070.23 crore in FY13. The NSE made a profit of Rs.877.61 crore, the BSE made 171.2 crore while MCX-SX made Rs.21.42 crore. The exchanges would have had to transfer Rs. 267.55 crore to the settlement guarantee fund if the 25% rule was operational and applied to the net profit.