SEBI committee suggests tougher rules for new bourses

Mumbai: In a move that could make it difficult for corporate entities to set up stock exchanges, a Securities and Exchange Board of India (SEBI) committee on Tuesday recommended that only banks and public financial institutions could be anchor investors in bourses and stopping them from listing or making huge profits, reports PTI.

According to industry sources, the recommendations would make things difficult for FTIL group-founded new bourse MCX-SX, which is allowed to trade only in currency futures, and its plea for trading in equity and other segments has already been rejected by SEBI on non-compliance with shareholding and other norms.

In the report posted for public comments on the SEBI website, the committee suggested a minimum net worth of Rs100 crore for the stock exchanges and allowing only banks and public financial institutions as the anchor or main investors.

These anchor investors would need to be identified in the application itself by any entity seeking permission.

For anchor investors also, the committee has suggested a minimum Rs1,000 crore net worth.

The committee also suggested disallowing the stock exchanges to list themselves, although it recognised the benefits of listing in terms of providing investors an exit route.

But the disclosures and corporate governance requirements of the listing agreement would still be applicable on the bourses.

Sources said that no-listing recommendations could dampen the sentiments of entrepreneurs willing to set up bourses, as business entities would seek to realise the returns on their investments. Besides, retail investors would not be able to reap any benefits in the absence of listing.

On profits, the committee suggested that stock exchanges should be allowed to make only “reasonable” profits, although it stopped short of recommending any clear-cut cap on profitability and left it for SEBI to monitor and act against any super-profits that are made.

The high profits of larger bourse NSE has been a subject matter of sharp criticism by the newer entrant MCX-SX, which is currently allowed to trade only in currency futures.

SEBI rejected MCX-SX's plea to trade in equity and other segments on grounds including the bourse' shareholding structure not being in line with the current regulations. The market regulator had said that MCX-SX did not meet the rule of a single shareholder holding a maximum 5%, as it considered MCX and Financial Technologies India Ltd (FTIL), the two erstwhile promoters, as Persons Acting in Concert (PAC) entities.

SEBI has also been charged by MCX-SX with promoting NSE's monopoly.

While the SEBI committee admitted that there was need for more competition and avoid any monopoly, it said that the competition could also drive average-pricing below the long run average costs and force one or more firms out of market.

“The eventual outcome may thus be competitively inefficient, as the continuing exit of firms may result in a monopoly,” it said.

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Times Television Network appoints Avinash Kaul as CEO of Zoom

Times Television Network has appointed Avinash Kaul as the chief executive officer (CEO) of its Bollywood entertainment network, Zoom.

Mr Kaul will report to Sunil Lulla, managing director and CEO, Times Television Network. He joins Zoom from Sahara One where he was CEO of the three channels-Sahara One, Filmy and Firangi.

Mr Kaul has 12 years of experience in the television business and has worked with HTA Fulcrum, Discovery Communications, STAR India and NDTV Media.

At NDTV Media, he had spent several years handling diverse portfolios of operations, marketing and also headed its consulting division.

Times Television Network includes channels such as Times Now, ET Now, Zoom and Movies Now.

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MOIL IPO price band at Rs 340-Rs375, to fetch up to Rs1,238 cr

New Delhi: The government on Tuesday fixed a price band of Rs340-Rs375 a share for raising up to Rs1,238 crore through initial sale of shares in Manganese Ore India Ltd (MOIL), which will become the fifth state-run company to see divestment this fiscal, reports PTI.

The Centre will dilute 10% stake in the country's largest manganese manufacturer, while Madhya Pradesh and Maharashtra governments will shed 5% each through the public offer that will open on 26th November and close on 1st December.

The issue would raise a total of Rs1,238 crore at the upper end of the price band, including 5% discount to retail investors and MOIL employees.

A meeting of the Empowered Group of Ministers (EGoM), chaired by finance minister Pranab Mukherjee and attended by home minister P Chidambaram and Planning Commission deputy chairman Montek Singh Ahluwalia, fixed the price band at Rs340-Rs375 a share, according to sources.

The initial public offer (IPO) will consist of over 3.36 crore shares. MOIL has a total employee strength of 6,734 and about 3,000 employees have already opened demat accounts.

For the half year ended 30th September, the company's turnover was at Rs635 crore as compared to Rs430 crore in the first half of previous fiscal. Profit after tax for the first half of this year stood at Rs330 crore against Rs201 crore in the year-ago period.

The government, which hopes to raise Rs40,000 crore through disinvestment this fiscal, has already mopped up close to Rs20,000 crore through divestment in PSUs Satluj Jal Vidyut Nigam, Engineers India, Coal India and Power Grid.

After MOIL, the follow-on public offer (FPO) of state-owned Shipping Corporation of India is next in line. Its public offer would open on 30th November and close on 3rd December. This would be followed by disinvestment in Hindustan Copper, whose FPO opens in the first week of December.

The government is likely to dilute its stake in Indian Oil Corporation, ONGC and SAIL in the last quarter of the current fiscal.

In 2009-10, the government had raised Rs25,000 crore through stake sale in Oil India, NMDC, REC and NTPC.

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COMMENTS

B V KRISHNAN

6 years ago

The article could have included some comments on the valuations of the company vis.a.vis the price band offered; it could have served as a guidance to the readers.

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