Brushing aside criticism by stock exchanges, former RBI Governor and chairman of a SEBI committee Bimal Jalan on Tuesday defended his report saying that bourses could not be allowed to get listed on a market that was still volatile.

Public interest

“We have expressed our views based on balance of opinions. The listing will have some implication which has to be taken into account. This is not the time for listing because the market is extremely skewed. You can review the recommendations after five years,” Dr. Jalan told reporters on the sidelines of an event here.

Responding to criticism of his report on market intermediaries, Dr. Jalan said, “I do not accept that it would hamper competition in the market place. Stock exchange is performing the service business. It has to safeguard the interest of public and other stakeholders.”.

The Securities and Exchange Board of India, he added, could take a final view on the issue of listing by stock exchanges.

The Jalan committee report, which was placed on the SEBI website to elicit public views, had opposed listing of stock exchanges on bourses arguing that any downward movement of their share prices could hit the credibility of the market institutions.

The report evoked sharp reaction from experts and market participants.

The report, if implemented, could derail the plans of the country's two premier bourses — the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) — to go public.

The report of the committee, whose members included Uday Kotak and Tata group's Senior Executive Kishore Chauker, could be taken up for consideration in the next meeting of the SEBI board.

Pointing out that the market infrastructure institutions (MIIs) were public institutions, the report had said, “any downward movement in its share prices may lead to a loss of credibility and this may be detrimental to the market as a whole... Therefore, the committee is not in favour of permitting listing of MIIs.''

The stakeholders have been asked to send their comments on the recommendations of the report to SEBI by December 31.

Reacting to the report, MCX-SX Managing Director and CEO Joseph Massey had said banks and insurers, which were more critical than exchanges, were allowed to raise capital from listing and also have more competition. At the same time, the exchanges were not being allowed to list and the new recommendations would now prevent new entrants in the exchange space, he had said.