The Securities and Exchange Board of India (Sebi) has decided to reduce the number of listed companies on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). The move follows an off-site meeting of Sebi’s top brass last month where several focus areas were discussed including reduction of listed companies which have been suspended,The Business Standard reports .
Sebi Chairman U K Sinha said that there were over 3000 companies listed on regional exchanges for which exit plan has been spelt out. Of these, 511 have opted to upgrade themselves to get listed on main bourses. On BSE and NSE together, there are 1,200 listed companies which have been suspended for more than seven years. Sebi plans to enable an exit option for shareholders of these companies. “We will ask stock exchange concerned to appoint third party firms to determine the valuation of these firms to provide an exit to shareholders,” said Sinha.
If promoters don’t pay investors at the determined price then they would face the risk of getting barred from entering the capital market which could be as long as 10 years. They would also not be allowed to be directors in companies. There are about 5,400 companies listed on the BSE and NSE.
Sebi has many other priorities areas for 2016-17. One of them is to take action against auditors of companies involved in manipulation or other violations if there is substantial proof of the auditor’s involvement. So far, Sebi was only able to recommend the auditors body Institute of Chartered Accountants of India to take action against its member auditors. “The amendment to the Sebi Act in 2014 gives us powers to take action against auditors too,” Sinha added. Once implemented, this would be another deterrent for capital market manipulators.
Regulating high frequency trading or algo trading, which accounts for 40 per cent of the volume in equity and derivatives markets, to protect the integrity of the market and create a level-playing field for other classes of investors is another priority area for Sebi in the current financial year.
Sebi will finalise new set of norms to tighten algo trading. Options that are under consideration include action on two parts. The first would be to remove the speed advantage that algo traders in co-location facilities enjoy and the second is to create a level-playing field in information dissemination such as tick-by-tick trading data between algo and manual trades.