New Delhi: Dr. Bimal Jalan Committee report has failed to find market favour in respect of non listing of Market Infrastructure Institutions (MIIs), capping of profits and fixing of executive remunerations.

This is the gist of the panel discussion organised by ASSOCHAM today. SEBI had appointed a committee headed by Dr Bimal Jalan in February 2010 to review Ownership and Governance of Market Infrastructure Institutions (MII) in  which submitted its report to SEBI. SEBI has now sought comments from the public as well as all stakeholders by 31st Dec., 2010.

ASSOCHAM organized a Round table discussion to elicit the views and comments on the report. The majority of the participants expressed deep anguish that the recommendations were very regressive and against the current expectations of more competition and Corporate Governance in MIIs. The market needs more competition and better regulation rather than less competition and outsourced regulation.

Most of the speakers mainly drawn from the stakeholders expressed the view that non listing of MIIs will be detrimental to the growth of the financial markets and counter  the current government policy to bring competition as well as depth in the market. The large number of investors both domestic as well as foreign, have invested in these institutions and would be looking for an exit route on listing. Such a move will undermine the Indian Growth story and give adverse signals.

Many renowned speakers representing various stakeholders, members of stock exchanges, and representatives, consultants, economists, expressed that the recommendations  reflect myopic view  of the Committee. Most of the participants  failed to understand  the basis of the report against  competition in Stock Exchanges and non listing of MII. The panel came out with the suggestion that the Demutualization of the Stock Exchanges was proposed with the idea to ultimately listing them so as to create liquidity as well as discover market price. However the recommendation of the committee for non listing of MII has come as a shock.

The participants  had consensus that there should not be any cap on the number of Stock Exchanges and  competition will drive the growth of industry where the economy is set to develop if more exchanges are brought to the foray and will lead to more competition. The panel members quoted the success story in Telecom as well as power sector where competition has brought down cost for  the  consumer, they noted. World over there are no restrictions on the number of stock exchanges. However a section of the panel noted that this issue be settled by SEBI based on the laid down policy.

On capping of the profits, it suggested that the world over profit alone drives investments and provide funds for innovation and technology. It will drive the market and business be more profit oriented and it will brings technology innovations, corporate governance and more participants and their concern is if market is growing then the infrastructure required will also grow sequel to these changes.

Regarding the cap on management’s remuneration there was majority opinion that remuneration should not be subjected to cap but be linked to profit. As this would bring the best of talent to man these institutions. However there could be set regulations in line with the existing practices as emanating in PSU Banks.