When a statutory body like SEBI sets a committee, what do you think can be the objective of such a committee? The objective of setting a committee may vary, but it is done mostly with the idea of analyzing an issue of some significance and expecting the committee to provide some meaningful suggestion. However, Bimal Jalan Committee set up by SEBI to 'Review Ownership and Governance of Market Infrastructure Institutions' has been done with some deliberate intentions.

Some of the suggestions of Bimal Jalan Committee defy logic and give an impression that deliberate restrictions have been suggested by the committee to protect interest of the most successful stock exchange in the country. One of the key recommendations of the committee is related to the ownership of the stock exchange.

At present, the MIMPS (Manner of Increasing and Maintaining Public Shareholding in Recognised Stock Exchanges) Regulations permit the following entities to hold up to 15%, after seeking prior approval from SEBI:-

(i) Stock Exchange
(ii) Depository
(iii) Clearing corporation
(iv) Banking company as defined under clause (c) of section 5 of the Banking Regulation Act, 1949
(v) Insurance company as defined under sub-section (8) of section 2 of the Insurance Act, 1938
(vi) Public financial institution defined under section 4A of the Companies Act, 1956

The committee has recommended that only well-capitalized public financial institutions and banks may only be permitted to be the anchor institutional investors for stock exchanges. Anchor Institutional Investor has been described as an institution who will take the lead role of setting up a stock exchange. These institutions alone will be allowed to hold initial stake of 15% to 24%. As per the recommendation given by the committee,' A single anchor institutional investor may be permitted to hold up to 24% of the total equity capital of an exchange, along with persons acting in concert.' This almost closes the doors for corporate to enter the stock exchange arena. It is important to note that stock exchange is a very profitable business and topline and bottomline of NSE give an indication of how profitable the business could be.

Since anchor financial institution will take lead in setting up of stock exchange, the prospects of setting up of stock exchange will corporate will become impossible. This means that stock exchange like NSE will continue to have monopoly as MCX-SX has not been set up by anchor institutional investor. This means that in future we won't see new stock exchanges coming up and even if they do come up, they will be promoted mostly by so-called government backed institutions which means that there will no competition for NSE.

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