Exit Policy for De-recognized/ Non-operational Stock Exchanges
Summary
This circular revises the exit policy for stock exchanges, allowing voluntary surrender of recognition or mandating compulsory de-recognition based on turnover thresholds. It outlines procedures for exclusively listed companies to migrate to other exchanges or utilize a dissemination board if migration fails. The document also details asset distribution rules, payment of dues to SEBI, and restrictions on the use of the 'stock exchange' name post-de-recognition.
Text
Exchanges may seek exit through voluntary surrender of recognition.
Stock exchanges where the annual trading turnover on its own platform is less than Rs 1000 Crore can apply to SEBI for voluntary surrender of recognition and exit, at any time before the expiry of two years from the date of issuance of this Circular.
If the stock exchange is not able to achieve the prescribed turnover of Rs 1000 Crores on continuous basis or does not apply for voluntary surrender of recognition and exit before the expiry of two years from the date of this Circular, SEBI shall proceed with compulsory de-recognition and exit of such stock exchanges, in terms of the conditions as may be specified by SEBI.
Stock Exchanges which are already de-recognised as on date, shall make an application for exit within two months from the date of this circular. Upon failure to do so, the de-recognized exchange shall be subject to compulsory exit process.
Exclusively listed companies shall list on any other recognized stock exchange.
The exclusively listed companies, which fail to obtain listing on any other stock exchange, will cease to be a listed company and will be moved to the dissemination board by the exiting stock exchange.
Exiting Stock Exchanges will be required to enter into an agreement with at least one of the stock exchanges with nationwide trading terminals providing the Dissemination Board.
No contract note is required to be issued for such transactions.
The matched trades will not be settled through the stock exchange/ Clearing Corporation mechanism and hence, there will be no recourse to the Settlement/ Trade Guarantee Fund and Investor Protection Fund of the Exchange for the trades on Dissemination Board
In case of de-recognition of a stock exchange, the exchange may provide trading opportunity to their trading members to trade on stock exchanges having nationwide terminals through their subsidiary company, which will function as normal broking entity in terms of SEBI circular dated December 29, 2008.
De-recognized stock exchange (voluntarily de-recognized or compulsorily de-recognized) is permitted to distribute its assets subject to certain conditions as laid down in this circular, as well as other guidelines that may be issued by SEBI, Government(s), or any other statutory authority from time to time.
For the purpose of valuation of the assets of the stock exchange, a valuation agency shall be appointed by SEBI.
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Source: SecMarx — Exit Policy for De-recognized/ Non-operational Stock Exchanges. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.