SEBI May Consider Stock Exchange Self-Listing With Safeguards, Says Tuhin Kanta Pandey

The Securities and Exchange Board of India (SEBI) may explore safeguards for permitting stock exchanges to list their own shares, according to Chairman Tuhin Kanta Pandey, who spoke at the BFSI Insight Summit in Mumbai. Pandey pointed out potential conflicts of interest when an exchange self-regulates its shares, arguing that an exchange cannot simultaneously be a regulator over its own trading.

Currently, India's regulatory framework prohibits stock exchanges from self-listing on their platforms. While some international exchanges permit self-listing, SEBI acknowledged the need for careful evaluation of this practice. The regulator could review practices followed by European exchanges and the New York Stock Exchange before contemplating changes.

Pandey acknowledged the benefits and drawbacks of self-listing, especially given India's multiple stock exchanges. The matter has also surfaced in discussions about whether National Stock Exchange (NSE) shares might qualify for inclusion in benchmark indices like the Nifty 50. However, SEBI has neither ruled out the possibility nor initiated an active review.

Regarding reopening defunct regional exchanges, such as the Calcutta Stock Exchange, Pandey stated that existing regulations permit proposals for establishing exchanges. Applicants must meet prescribed governance standards, capital requirements, and shareholding restrictions. He emphasized that electronic trading now allows investors in India and abroad to access exchanges without geographical limitations, but noted that liquidity would be crucial for a revived exchange's success.

Any proposal would require a credible business plan demonstrating its ability to attract clients and sustain operations, subject to SEBI's assessment of commercial feasibility.