In the wake of a raging debate over proposed new norms for ownership and governance of stock exchanges, Sebi may consider making listing optional for the bourses and separating their regulatory and business roles.
The market regulator is considering whether the bourses can be asked to put in place 'Chinese Walls' between their regulatory and corporate functions, a senior official said.
The move is aimed at keeping the front-line regulatory role of the bourses unaffected by their profit-making and other business interests after they become publicly held companies following their listing, the official added.
Ever since a Sebi-appointed committee, headed by former RBI Governor Bimal Jalan, submitted a report late last month on proposed new norms for the ownership and governance of stock exchanges, there has been a heated debate over various proposals made by the panel.
The committee has suggested sweeping changes in the way stock exchanges function and its proposals, which have been put out by Sebi for public comments till the month-end, include not allowing the bourses to get listed to safeguard their front-line regulatory role.
The proposals have faced severe criticism from various quarters, including industry chambers and many market participants, including the country's oldest bourse BSE and new entrant MCX-SX.
The official, speaking on condition of anonymity, said Sebi would take into account all the feedback it has received, including those from the government and responses to the public comments sought by it through its website. It will also consider the views expressed in various forums like industry chambers, public debates and in the media.
Some market players have also sought the government's intervention in the matter.
The proposals are only indicative in nature and it is Sebi which will take the final call on the matter, he said, adding that the report submitted by the panel has not been discussed by the Sebi board even once so far.
The Sebi board will consider the report, as well as the feedback on its various proposals, at its next meeting, expected to be held next month.
The regulator will also take into account the fact that the response was not good enough when the Jalan committee had sought feedback before putting forth its proposals.
The high-level committee had submitted its report about six months after it was set up, but received only 29 responses to a questionnaire it had floated seeking comments from the public and various market players.
The committee suggested that listing, as well as high profitability, could come in the way of the bourses' regulatory role, as they are supposed to act as a front-line watchdog for market activities and report any suspicious activities to Sebi.
Besides, the bourses also execute various regulatory and market development measures adopted by Sebi.
After analysing the feedback received so far on the proposals, Sebi is considering whether it could be left for individual exchanges to decide on whether to list or not. At the same time, Sebi is also considering the idea of segregating the regulatory and corporate roles of the bourses, but it has not yet been decided how this can be done.
BSE and MCX-SX have previously made their intentions clear to get listed over a period of time, while the country's largest bourse NSE has never expressed any such intentions.
MCX-SX is currently allowed to trade only in currency futures and its plea for trading in equity and other segments has been rejected by Sebi.
The proposals have not gone down well with shareholders, who are estimated to have invested over Rs 10,000 crore in the country's various bourses over the past few years.
Some of these shareholders, mostly from overseas, have already expressed their concerns in relation to their respective bourses.
Some NSE shareholders are also said to have expressed their concern over the non-listing proposals, but the bourse has so far not opposed the proposed changes. NSE is said to be of the view that it would only consider listing if it is made mandatory.
Recently, at a meeting organised by CII to discuss the Jalan Committee report, NSE MD and CEO Ravi Narayan said the business of the stock exchanges was the only business where commercial and regulatory responsibilities were intertwined.
"There has been no debate on this conflict of interest and if we believe the two roles of regulation and earning profits can be segregated, the question is how can they be segregated, what is the right time for it, where do we house the regulatory role," he said.
NSE Joint MD Chitra Ramakrishna also said capping profits should not come in the way of the incentive to bring about cost-efficiency in an organisation.
