 "BSE, Sebi, Gift City, IFSC guidelines")
BSE has assured capital market regulator Securities and Exchange Board India (Sebi) that it will meet the minimum brokers criteria required to set up an international stock exchange. The exchange is said to have written a letter to Sebi chief UK Sinha over its preparedness to go live in the Gujarat International Finance-Tech City (Gift City). BSE is setting up a new exchange inside the Gift City, which will be inaugurated on January 9.
BSE is said to have told the market regulator that it has been working for months to obtaining various regulatory clearances to set shop in the Gift City. BSE spokesperson declined to comment on the issue.
Under the International Financial Services Centres (IFSC) rules, the exchange needs to have at least 50 brokers to start but BSE is said to have only 19 so far on the new platform. Sources said out of these 19 brokers, only five have received Sebi nod to trade on the new platform. The exchange also informed Sebi that many of the brokers have shown interest being part of the platform.
Worried over preparedness, Sebi has started a three-day audit on BSE to check if the exchange has complied with its IFSC guidelines. Gift City is the country's first IFSC and also Prime Minister Narendra Modi's favoured project.
Sebi's audit will also examine the concerns on BSE's products, which would likely to start with derivatives, said a source. Besides, setting up an exchange in Gift City needs an initial capital of Rs 25 crore, which needs to be scaled up to Rs 100 crore within three years. For a clearing corporation, the initial capital requirement will be 50 crore, to be achieved in three years.
BSE intends to provide an electronic platform for facilitating trading, clearing and settlement of securities, commodities, interest rates, currencies, other classes of assets and derivatives by international investors in the GIFT-IFSC. It also proposes to set up an international clearing corporation in GIFT-IFSC, so that foreign exchanges and clearing corporations may be inducted as partners into these entities.
BSE signed an agreement with GIFT SEZ Ltd to set up an international exchange and clearing corporation in January 2015. It got in-principle approval from the regulator last month.
The proposed international exchange has got various tax incentives from the government, including exemptions from stamp duty, commodity and securities transactions tax. It will be subject to Minimum Alternate Tax of nine per cent.
IFSC is being developed for customers outside the jurisdiction of the domestic economy. Such centres deal with flows of finance, financial products and services across borders. The concept was first announced by the finance ministry on March 1, 2015. Sebi announced the IFSC guidelines nearly three months later.
