Sebi comes out with instructions for bourses on governance
- Real estate bill: BJP hits back at Rahul Gandhi, asks if he visited hail-affected farmers in Amethi
- Mumbai: Assistant sub-inspector shoots senior, self in Vakola police station
- Moga bus molestation: Deputy CM Sukhbir Singh orders Orbit buses off the road amid protests
- Three killed, 16 injured in accident at Harduaganj thermal station
- Amarnath Yatra: Nirmal Singh hits back at Geelani, says separatists have become 'irrelevant'
Market regulator Sebi today announced exhaustive instructions related to ownership and governance for stock exchanges and clearing corporations, a move aimed to promote their effective and transparent functioning.
Stock exchanges and clearing corporations are now required to submit background and related information to establish that their shareholders/promoters are "fit and proper persons", among others.
Entities seeking recognition to operate as a bourse or clearing corporation need to submit various information, including business feasibility plan for the next five years, financial statements and bank account details, to Sebi.
A key element in execution of orders on exchanges, clearing corporations work with bourses to handle confirmation, delivery and settlement of transactions.
In a circular, market regulator Sebi said the applicant should provide satisfactory information regarding appointment of heads of key departments such as legal, listing, member registration, trading and surveillance in case of a stock exchange.
Once the recognition is granted, stock exchanges can commence operations with a minimum of 50 trading members while there should be at least 25 clearing members to start a clearing corporation.
Those exchanges and clearing corporation having a networth of less than Rs 100 crore and Rs 300 crore, respectively, at the time of commencement, have to submit plans -- within 90 days -- for achieving minimum threshold networth levels. These plans have to be approved by respective shareholders.
Outlining instructions for executive compensation at stock exchanges and clearing corporations, Sebi said variable pay component would not exceed one-third of total amount and 50 per cent of the variable pay would be paid on a deferred basis after three years.
As per Sebi, ESOPs (Employees Stock Options Plan) and other equity linked instruments would not form part of the compensation for the key management personnel.
Before giving compensation, entities are required to consider their financial conditions such as net profit and revenues.