Procedural norms on Recognitions, Ownership and Governance for Stock Exchanges and Clearing Corporations
Summary
This circular establishes procedural norms for the recognition, ownership, and governance of stock exchanges and clearing corporations under SEBI regulations. It outlines the stages for seeking recognition, including requirements for in-principle and final approval from the Board. Additionally, it mandates action plans for achieving minimum net worth and sets forth detailed procedures for shareholding approvals and director appointments. This section details the specific information and declarations required for various categories of directors, including independent, managing, public interest, and shareholder directors. It outlines the procedures for their selection, appointment, tenure, and the mandatory formation of statutory committees by stock exchanges and clearing corporations. The text also establishes general conditions for appointments and the fit and proper criteria for key management personnel. This section outlines governance norms for independent external persons, compensation policies for key management personnel, and the segregation of regulatory departments. It details procedures for submitting amendments to governing documents, establishing internal conflict resolu
Text
An applicant seeking recognition as a stock exchange/ clearing corporation shall substantiate its capability to fulfill all the requirements laid down under SCRA, SCRR and regulation 7 of the SECC Regulations at the time of making the application.
For the purpose of grant of in-principle approval under regulation 7(5) of the SECC Regulations, the Board may take into account the factors which it may deem fit in the interest of the securities market.
Before grant of final approval, in addition to the above, the applicant should satisfy the Board with regard to compliance of the following: Appointment of heads of key departments... Satisfactory compliance with observations of SEBI during inquiry/ inspection by SEBI.
After grant of recognition, the stock exchange can commence trading operations with a minimum of 50 trading members and the clearing corporation can commence clearing and settlement operations with a minimum of 25 clearing members.
A clearing corporation shall in terms of applicable provisions of section 9 of the SCRA and regulation 4 of SECC Regulations make bye-laws, providing inter alia for the following: timings for pay-in and pay-out, rules for clearing and settlement, risk management mechanism.
A recognised stock exchange having a networth of less than Rs.100 crore, as on the date of commencement of the SECC Regulations, shall submit its plan duly approved by its shareholders to SEBI for achieving the networth in terms of regulation 14 of SECC Regulations, within 90 days from the date of this circular.
A clearing corporation which has made application for recognition in terms of second proviso of regulation 3 of the SECC Regulations and has a networth of less than Rs. 300 crore shall submit its plan duly approved by its shareholders to SEBI, for achieving the networth in terms of regulation 14 of the SECC Regulations, within 90 days from the date of this circular.
A shareholder seeking SEBI's approval for holding more than 2% or 5% of paid up equity share capital of a stock exchange or clearing corporation shall submit the following particulars: Name, Address, Details of employment/ business, SEBI registration number.
The stock exchange/clearing corporation may also lay down any fit and proper criteria without diluting and limiting the principles and criteria laid down in regulation 20 of SECC Regulations.
The stock exchange/clearing corporation application shall ensure that all their shareholder are fit and proper persons.
The application for approval under clause 4.1 shall be submitted to SEBI through the stock exchange/clearing corporation concerned. The stock exchange/clearing corporation shall verify the declarations/ undertakings given by the shareholders and forward the application which is, in its opinion, fit for approval alongwith its recommendation for SEBI's approval.
The stock exchange/clearing corporation shall put in place a monitoring mechanism to ensure compliance with the shareholding restrictions prescribed in SECC Regulations at all times.
You have read the preview. Create a free account to read the full document and see every order that applied it.
Free accounts include 10 searches/day with full text access.
Source: SecMarx — Procedural norms on Recognitions, Ownership and Governance for Stock Exchanges and Clearing Corporations. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.