Advertisement

MUMBAI: The Reserve Bank of India (RBI) on Friday allowed foreign direct investment (FDI) in infrastructure companies in the securities market — stock exchanges, depositories and clearing corporations — with a separate FDI cap of 26 per cent and FII (foreign institutional investment) cap of 23 per cent. This will be in compliance with the SEBI regulations.

"It has been decided in consultation with the Central Government to allow foreign investment in infrastructure companies in securities markets, namely, stock exchanges, depositories and clearing corporations, in compliance with the SEBI Regulations,'' the RBI stated in a notification to authorised dealers (ADs).

Foreign investment up to 49 per cent will be allowed in these companies with a separate FDI cap of 26 per cent and FII cap of 23 per cent. FDI will be allowed with specific prior approval of the Foreign Investment Promotion Board (FIPB) and FII investment will be allowed only through purchases in the secondary market.

The RBI issued these directions under Sec. 10(4) and 11(1) of the Foreign Exchange Management Act, 1999. The central bank issued amendments to the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000.

In a separate notice to all stock exchanges, depositories and custodians of securities, SEBI stated that, "FII shall not seek and will not get representation on the board of directors and no foreign investor, including persons acting in concert, will hold more than five per cent of the equity in these companies.''

"These limits for foreign investment in respect of recognised stock exchanges shall be subject to the limit of five per cent shareholding by any person, directly or indirectly, as prescribed under the Securities Contracts (Regulation) (Manner of Increasing and Maintaining Public Shareholding in Recognised Stock Exchanges) Regulations, 2006,'' SEBI added.

As per regulations issued by SEBI in November, no person shall acquire or hold more than five per cent in the paid-up equity capital of a recognised stock exchange. No person individually or persons acting in concert with him can acquire and/or hold more than one per cent in the paid-up equity capital of a recognised stock exchange unless he is a "fit and proper person'' and has taken the prior approval of SEBI for doing so.

Demutualisation

PTI reports:

The latest move is widely expected to benefit demutualisation of stock exchanges, beginning with the Bombay Stock Exchange (BSE). The BSE had been waiting for these guidelines as it has to demutualise by May next year for which it has appointed Kotak Mahindra Capital as its financial advisor.

There were reports that Nasdaq and NYSE, among other overseas bourses and funds, were interested in picking up a stake in BSE. In August, Nasdaq officials met their counterparts in BSE, giving rise to speculation that the tech exchange would pick up a stake in it.

Printer friendly page  
Send this article to Friends by E-Mail