Sebi meet to fix bourses' divestment norms

The board of the Securities and Exchange Board of India (Sebi) is meeting today to finalise the norms for divestment of brokers' stake in stock exchanges.

The meeting, the first after Sebi moved into its new headquarters at Bandra-Kurla Complex, is also likely to give final shape to mutual funds' investments in real-estate sector. The capital market regulator is also expected to ratify a proposal to levy a fee from stock exchanges, which would range from Rs 1 lakh to Rs 1 crore.

The guidelines for divestment of brokers' stake in stock exchange are expected to prohibit corporate houses from making equity investment in bourses. As per the proposal, only Indian banks and insurance companies would be allowed to buy equity stake in stock exchanges.

However, Sebi would not take any decision regarding Foreign Institutional Investment/Foreign Direct Investment in stock exchanges. Sebi would wait for the government to take a final decison on this crucial aspect, sources said.

The minimum level of strategic  investment in stock exchanges would be set at five per cent and the bourses would be allowed to sell their stakes through public issue, preferential allotment or private placement, sources said.

Bombay Stock Exchange (BSE), which had appointed Kotak Mahindra Capital Company to advise the exchange on the divestment issue, is required to bring down brokers' stake to less than 51% before the deadline of May 2007. As per the BSE plan, it would divest 26% to a strategic partner by December this year and another 25% through an IPO by May 2007.

Sebi's divestment guidelines are expected to allow BSE to move forward as per the proposed roadmap, sources said.

On real-estate investments by mutual funds, sources said the proposal relates to fixing sectoral caps on property, commercial establishments, township projects, residential properties, etc., sources said.

Real-estate mutual funds, as per the proposal, will be close ended funds and their units would have to be listed on the stock exchanges.