| LIC is one of the promoters in OTCEI, holding around 10 per cent. Under the guidelines for demutualisation, no single entity can hold more than 5 per cent stake in a stock exchange. |
| According to sources, LIC had sought an exemption from the government and the Securities and Exchange Board of India (Sebi). In a letter written to Sebi, it had stated that OTCEI was formed under Section 25 of the Companies Act. As per this, it was a no-profit-no-loss organisation where profits, if any, had to be ploughed back into the activity of the company. |
| Since OTCEI has not been performing well, LIC was finding it difficult to get buyers and also it might not get a good valuation, said sources. LIC had further stated that the platform could be transformed into a small and medium exchange as was proposed by Sebi. |
| The government is of the view that rules cannot be different as per the structure of the company and as a single entity, the stake has to be brought down to 5 per cent. LIC on its own can take the initiative to set up an SME exchange on OTCEI. |
| Or else, sources said, the exchange could be derecognised like many other regional exchanges. The other promoters of OTCEI are Unit Trust of India, ICICI, IDBI, SBI Capital Markets, IFCI, Canbank Financial Services and General Insurance Corporation. |
| Sebi had written letters to all promoters of the NSE and OTCEI to pare down their stake to below 5 per cent as per the requirement of the demutualisation guidelines. The market regulator has set a deadline of October 2008 for the promoters to comply. |
| Meanwhile, the promoters of NSE are grappling with the problem of getting buyers who can pay the right price. |
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