The government may turn down some key recommendations of the Bimal Jalan committee report on ownership and governance of market infrastructure institutions. The committee recommended that exchanges should not be allowed to list, a ceiling be put on their profits and dividends, and the role of anchor investors be limited to only domestic players.
A finance ministry official told Business Standard the report had been criticised as anti-competitive by the industry and the government would not allow any anti-competitive practices. He said a final view would be taken after discussing it with all stakeholders, including industry chambers.
In a recent interactive session organised by the Confederation of Indian Industries, many stakeholders, including stock exchanges, market intermediaries, depositories, private equity investors, economists and senior journalists, had criticised various aspects of the report. In a round table at Assocham, many participants had said the recommendations were very regressive and against the current expectations of more competition.
The Bombay Stock Exchange and MCX-SX have repeatedly expressed their displeasure over the report and said it would promote monopolies and anti-competitive business practices in the market.
They have alleged the report would benefit the National Stock Exchange (NSE). NSE, on the other hand, has supported many of the recommendations of the committee.
The report, placed on the website of the Securities and Exchange Board of India (Sebi) last month to invite public comments, had opposed listing of stock exchanges on bourses arguing any downward movement of their share prices could hit the credibility of the market institutions. Sebi is likely to take up the report in its next board meeting.
Faced with criticism from various quarters, Jalan also seems to have softened his stance a bit. At the CII interactive session, he said the committee was not fundamentally opposed to listing, but in the current situation, bourses should not be allowed to list because the “balance” was not clear.
“We have a completely open mind on listing. There is no fundamental assumption this should not be listed. There is a good case of listing, but there is this issue. Until we stabilise markets, we have taken a view on listing saying ‘on balance’… You have to take a balanced view that should be subject to discussion, debate and change, if required,” Jalan had said.
Jalan, however, deniedclaims that his report would hamper competition in the market place. He said stock exchanges are in the service business and they have to safeguard the interest of the public and other stakeholders.
