The Hindu : Business : FDI policy on bourses to be firmed up

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Friday, Sep 22, 2006
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FDI policy on bourses to be firmed up

Special Correspondent

SBI to issue guidelines on demutualisation BSE to sell 26 p.c. of stake to strategic investors

NEW DELHI: The Central Government on Thursday announced that the policy issue of whether foreign players can be permitted to hold equity stakes in Indian stock exchanges would be made clear within ten days.

The policy under formulation, according to sources in the Finance Ministry, will clarify as to whether stock exchanges will be permitted to invite foreign direct investment (FDI) while divesting brokers' equity in them below 49 per cent. This will be in keeping with SEBI's guidelines on demutualisation.

In this regard, two rounds of discussion had already been held between officials of the Finance Ministry and the Reserve Bank of India Governor, Y. V. Reddy, and others. Another round was to be held with the Securities and Exchange Board of India Chairman, M. Damodaran, within two to three days, the sources said. Earlier, the need for having a policy on FDI in stock exchanges was not felt necessary, as the bourses were not companies. These were essentially associations of brokers who held equity stakes in them. However, an FDI policy for stock exchanges is now required as it was mandatory for all the bourses to corporatise and demutualise, the sources explained.

Interestingly, NASDAQ is already believed to have evinced interest in picking up a stake in the Bombay Stock Exchange. While the FDI policy is to be formulated by the Commerce Ministry with inputs from North Block, SEBI, as the market regulator, will be issuing guidelines on the mechanism of demutualisation.

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