Sebi wants to complete SE corporatisation by Mar-end

The Securities and Exchange Board of India (Sebi) wants to complete the entire process of corporatisation and demutualisation of the stock exchanges by the end March 31, 2005.

Most of the stock exchanges, including BSE, Ahmedabad and Indore stock exchanged have already submitted their corporatisation proposals to Sebi, executive director Pratip Kar.

These proposals are being examined.

According to Sebi, specific issues such as stamp duty on conversion are also being examined. As per the time line drawm up by Sebi in consultation with the exchanges, the latter have to complete all the formalities related to the corporatisation process by February 28, 2005.

Sebi will also make enquiries and by March 31, 2005, the schemes will be approved or rejected and the orders accompanying approvals will be issued.

On April 1, 2005, the orders will be notified in the Gazette and the concerned information will also be disseminated to the public by announcements in newspapers. On the same day Sebi will also issue the notification of the regulation in the Gazette.

Exactly a year later that is March 31, 2006 the exchanges will have to reduce the stake of the trading members to 49 per cent. In case of failure to do so the exchanges will be derecognised by Sebi.

All these decisions were taken at a meeting which the exchanges had with Sebi on November 9, 2004.

According to sources some of the exchanges have also mooted proposals for diluting the stake either through a public offering or through divestment in favour of a bank or institution. Sebi sources said that both the options would be examined on the basis of merits.

The government, it may be recalled, had promulgated an ordinance on October 12, 2004 for compulsory corporatisation of the exchanges.

Centre on hedge funds : Meanwhile, PTI adds from New Delhi that the government has said unregulated hedge funds will not be allowed to operate in the country in the wake of securities scams which played havoc on the bourses in 2000 and 2001.

"It will be difficult to let unregulated hedge funds to invest here," particularly after the Joint Parliamentary Committee had pointed a finger to the overlap lacunae in the regulatory coordination, a senior finance ministry official said.

"If hedge funds are regulated in their home countries, we are prepared to accept them. In fact, under foreign institutional investors they are participating in the Indian markets," joint secretary in charge of capital markets, U K Sinha, said at a seminar here.

"Unregulated hedge funds are a problem," he said.

To a query as to why the government had thus far refrained from floating sovereign bonds, he said the rates for those papers will become the benchmark for corporate bonds.

The high fiscal deficit makes the government less credit-worthy borrower than the corporates which raise funds at a lower rate.

"Sovereign bonds will be detrimental to corporate sector as the rates for them will be on the higher side, whereas they are able to raise funds at much competitive rates now," he said.

On the equity market, he said during April-December this fiscal, Rs 30,500 crore was raised, which is highest in the last nine years.

"In the case of three issues, subscription applications crossed more than one million. This shows that faith of the retail investor has been restored," he said.