A proposal for diversified ownership of equity clearing corporations (CCs), which are currently entirely owned by stock exchanges, was made by the Securities and Exchange Board of India (SEBI).
In order to ensure that clearing corporations can function primarily in the public interest and not for commercial reasons, SEBI anticipates that their ownership will be broad-based and diversified.
SEBI said CCs perceived as independent
In a draft paper, SEBI stated that 'Clearing Corporations must be and perceived as, truly independent of exchanges, especially in such interoperable segments, to ensure that there is a level playing field across 'Market Infrastructure Institutions' (MIIs) with no perception of any perverse conflict of interest.' The general public was asked by SEBI (Securities and Exchange Board of India) to respond by December 13.
Options for shareholding of CCs (clearing corporations)
The first option proposed by the regulator would allow current exchange shareholders to directly own 49 per cent of the clearing corporation, with the parent exchange initially holding 51 per cent. Eventually, the exchange may be forced to reduce its holdings to 15 per cent.
Another option is for exchange shareholders to directly own all of the equity, in which case they would have the freedom to trade their shares in the CC. According to SEBI, this would enable the CC to separate from its parent exchange in a way that is equitable to the parent exchange's current shareholders.
Clearing Corporations operate as profitable public utlities
The regulator has also recommended that CCs function as profitable public utilities that reinvest in infrastructure, technology, and risk control. Furthermore, fee structures ought to stay affordable without raising investors' expenses.
To improve systemic resilience and lessen dependency on a single entity, the regulator has recommended supporting multi-asset CCs while keeping several CCs.
