Central listing body fights redundancy

Despite repeated requests Sebi has not taken any steps to make the CLA functional.

The Central Listing Authority (CLA) is being given a quiet burial. While the members of the CLA await Securities & Exchange Board of India's (Sebi) response on going ahead with making the CLA functional, Sebi Chief M Damodaran told Business Standard that CLA does not have much role to play anymore.

"Now the idea of 23 regional exchanges is not there. At the time the CLA was conceived the situation was different," he said.

Despite repeated requests from the members of the CLA for a meeting with Sebi to make the CLA functional, no meeting has been held since January this year.

"After the new Sebi chairman had assumed office, we had written to him that CLA will be able to work out its own internal framework. But we did not get any response from Sebi. Five officers were put on deputation from Sebi for CLA and even they have gone back," a member of the CLA told Business Standard.

He said CLA at present does not have powers on its own as it is under overall 'nominal' supervision of Sebi.

The CLA was intended to be a an independent body to carry out the principal function of receiving and processing applications for "letter precedent to listing."

With demutualisation of exchanges - while brokers would no longer actively manage the exchanges, the stock exchanges would continue to decide on listing applications.

"CLA was formed as Sebi had failed to carry out the function of vetting whether a company should be allowed to be listed. This function was sought to be separated from stock exchanges to avoid conflict of interest. This has not been done," said the CLA member.

CLA's permission was to be taken to permit the applicant to make a listing application to any exchange, including for re-listing of an already listed security.

"Either the finance ministry should issue some order to make the CLA functional or dissolve the body. What is the point of having an authority comprising eminent people while the body is not functioning?" the member added.

Till January this year about 15 meetings were held and Rs 5 crore released for the CLA. Even as the government is pushing for corporatisation of the stock exchanges, it is unlikely that an autonomous listing authority would become functional.