New Delhi: All stock exchanges in the country are to be corporatised and demutualised under a legislation to be introduced in monsoon session of Parliament beginning later this month. "The draft bills to amend the Securities Contracts (Regulation) Act of 1956 and Depositories Act of 1996, to give effect to the policy of corporatisation and demutualisation of stock exchanges will be introduced in the monsoon session," Parliamentary Affairs Minister, Sushma Swaraj said after the Cabinet meeting.
The new bills intend to correct the problems of conflicts of interests of broker members and improve governance in bourses, she said.
The other benefits of demutualisation of bourses would be streamlining of business operations consistent with market needs, streamlining the decision making process in bourses through appointment of a professional management.
The corporatisation would also enable bourses to raise capital, which can be used to improve technology and seek innovations or acquisitions of other markets, Swaraj said.
The Finance Ministry had proposed bills to amend SCRA in the Budget for 2002-03 following the recommendations of Joint Parliamentary Committee that probed the share scam of 2001.
Of the 23 stock exchanges in the country, Swaraj said 20 have been set up as companies either limited by guarantees or by shares while three bourses -- Bombay Stock Exchange, Ahmedabad Stock Exchange and Indore Stock Exchange -- are functioning as association of persons.
Government has sought amendments in the SCRA to ensure that stock exchanges can exist only in a corporatised and demutualised form.
