Govt formally withdraws recognition of Delhi Stock Exchange
21 Mar 2016
The government last week announced the formal withdrawal of recognition of Delhi Stock Exchange (DSE), more than a year after capital market regulator Sebi derecognised the bourse citing "serious irregularities" in its functioning.
A finance ministry notification dated 16 March said the recognition granted to the Delhi Stock Exchange Ltd "stands withdrawn".
DSE was reported to be among the few privileged bourses that were given permanent recognition by the Securities and Exchange Board of India (Sebi).
But, under certain provisions of the Securities Contracts (Regulation) Act, 1956, such recognition to a recognised stock exchange can be withdrawn if it "has not been corporatised and demutualised within the specified time".
In August 2005, Sebi had notified DSE Ltd (Corporatisation and Demutualisation) Scheme, 2005. The bourse was to be demutualised on or before 28 August 2007.
Under demutualisation, management and trading at a stock exchange are separated while under corporatisation the running of the bourse would be like that of a company.
Sebi, which found "serious irregularities" in the functioning of DSE had, earlier, decided to withdraw recognition granted to the exchange.
"I note that serious irregularities have been found in the functioning of Delhi Stock Exchange at the time when DSE was taking steps for demutualisation," Sebi whole time member Prashant Saran had said in an order dated 19 November 2014.
"It is seen that for completing the demutualisation process the erstwhile board of DSE had overlooked the due transfer of shares in demat accounts and receipt of funds by the appointed date," the order had said.