Exchanges to be demutualised next year: Damodaran

Kochi, Dec 4 (UNI) SEBI Chairman M Damodaran today said stock exchanges in the country would be demutualised in the coming year in a bid to root out malpractices in the bourses.

Delivering the commemoration lecture at the Fedbank Hormis Memorial Foundation here, he said demutualisation would help separate ownership and trading function and existing malpractices would be a 'thing of the past'.

He said malpractices were there as ownership and trading were with the same set of individuals. Demutualisation would help protect the interests of common investors in the Indian stock market.

Mr Damodaran said ownership patterns for exchanges post-demutualisation had been chalked out.

He expressed the hope that Indian Depository Receipts (IDR) would be a reality by next year. Through IDR foreign companies outside the country could have visibility and be listed in Indian stock market.

To streamline raising finances for small and medium enterprises (SMEs), an exchange would be opened by next year, he added.

Reiterating the importance of orienting and protecting the common investors, the SEBI Chairman said new capital protection orientation products would help first time investors to enter the market through mutual funds. Investors would not lose capital through these products if other conditions remained the same.

The gold exchange traded fund also facilitated small investors to accumulate units over a period of time, which could be traded to buy gold.

Giving importance to small investors, he said Real Estate Mutual Funds would help them to notionally own land.

The organisation was also setting up Investor Protection Fund with the fines and penalties levied on listed companies.

Mr Damodaran said for the purpose, the SEBI Act of 1992 would be amended.

UNI MA AA 2108