Institutions' bourse stake capped at 5%

The Securities and Exchange Board of India (Sebi) today approved norms for divestment of brokers' stakes in stock exchanges.

The Sebi board, which met here, also decided to wait for the government to take a final decision on the issue of foreign institutional investment/foreign direct investment in stock exchanges.

However, it has decided to cap institutional investment in stock exchanges at 5 per cent, either in consortium or as a single entity. Up to 1 per cent, there will be no restriction for institutional investments, according to the discussion.

"Beyond 1 per cent and up to 5 per cent, the proposals will be approved under the guidelines of Sebi," a source said.

"The board will come out with appropriate norms for divestment of brokers' stakes in stock exchanges," a board member said, when contacted.

According to the demutualisation report, every stock exchange can divest either by going for a strategic investment, public offer or private placement of shares or preferential allotment or a combination of these.

The Bombay Stock Exchange has intimated its intention to bring down its broker-members' stake to 49 per cent by selling 26 per cent to a strategic investor and 25 per cent through a public offer of shares.