Despite having a Dalal Street address, Bombay Stock Exchange 's (BSE) official walk-down the street can take a while longer. It's been a year since the exchange appointed 14 merchant bankers to make its long-awaited listing (IPO) happen; but SEBI's existing Stock Exchange and Clearing Corporation Regulations (SECC) are proving to be a hurdle.
In January BSE had asked that SEBI exempt it from the following clauses:
- A stock exchange is required to ensure every shareholder is fit & proper. BSE's argument is that once it is listed, ensuring only fit & proper investors buy shares from the secondary market will become impractical.
- That neither the Chairman nor any of the Directors hold a seat on the board of any other listed company. TCS boss S Ramadorai and HDFC chief Keki Mistry sit on the BSE board and retaining them will mean that TCS and HDFC should not be listed on the BSE.
- Waiver of the mandatory 1-year lock-in for existing shareholders. The argument here is that since the exchange is corporatized, it does not have defined promoters.
- An exemption from having to reduce its stakle in CDSL from 51 percent to 24 percent within three year.
- Exemption from compliance with the ICDR guidelines governing display of publicity material and information. the BSE says that since it is in the business of disseminating data and information of companies, these rules should not apply.
- BSE wants SEBI to clarity the definition of trading members. That's because when the exchange was corporatized, trading members were only allowed a 49 percent stake, with the balance 51 percent meant for public shareholders. Now the current SECC guidelines are ambiguous, saying public shareholders should not include trading members, clearing houses and associates;.it does not say whether this means all such entities or only those specific to BSE.
That's not all. To list, BSE will have to consolidate its shares by converting them from a face value of Re 1 to a face value of Rs 2. That's because SEBI's IPO regulations allow for the issue of shares with a face value of rupee 1 only if the shares are priced above Rs 500 each. Going by the grey market value, BSE is currently valued at Rs 1,500-2,000 crore.
Now for the BSE IPO to go through, SEBI will have to either grant these exemptions, or amend the rules themselves. Amendments will take time since the Bimal Jalan Committee on Market Infrastructure Institutions has voiced reservations against the listing of stock exchanges. Also, SEBI may not favour granting exemptions, as this may set a bad precedent.