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April 30, 2001
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Money > Business Headlines > Report April 30, 2001 |
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Demutualisation of bourses hits a snagSubhomoy Bhattacharjee The plan to demutualise stock exchanges has hit a roadblock with the finance ministry of the view that membership card-based valuation of bourses is not truly reflective of their value. The ministry also feels that the observations of the recently set up joint parliamentary committee on the stock scam should be taken into account. Also, a strong broker lobby has argued that it will be counterproductive to keep their entire fraternity unrepresented in the board of directors. In a series of presentations before the finance ministry, they argued that none of the major stock exchanges abroad were run without some involvement of the brokers in the management. However, this is something that the finance ministry is currently totally against. The ministry, keen to make an announcement on the issue soon, is therefore trying to find a way out of the impasse. The problem is compounded by the fact that market regulator Sebi has also not been able to give any clear advice on the issue. Even at a recent high level meeting between the finance ministry and Sebi, the issue could not be resolved. The finance ministry had earlier toyed with the idea of making amendments in the Stock Exchange Regulation Act, to change the exchanges into corporate bodies, but the insistence by the brokers has queered the pitch. Sources said the valuation of a bourse arrived at by multiplying the number of brokers with the membership card value was not appropriate. They cited a recent Supreme Court ruling which said granting of a ticket to trade did not grant any shareholding right to the broker. According to the court, this was an issue, which had to be decided separately. While finance minister Yashwant Sinha was keen to make an announcement on the demutualisation issue in Parliament, sources said that the feeling in the ministry now was to apparently ascertain the view of the JPC on the issue before taking any step, which could precipitate things. Without a figure placed on the value of the exchanges, it was also not possible to call for any bids from FIs to buy up the shares of the bourses, sources said. Powered by YOU MAY ALSO WANT TO READ:
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