India : Role of Self-Regulatory Organizations in Securities Market Regulation

This Note identifies four main theoretical options for securities markets self-regulation in India, based on precedents from international markets. There is no single 'right' approach - the note outlines three options that employ Self Reg...

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Main Author: World Bank
Format: Policy Note
Language:English
en_US
Published: Washington, DC 2013
Subjects:
Online Access:http://documents.worldbank.org/curated/en/2007/06/16450195/india-role-self-regulatory-organizations-securities-market-regulation
http://hdl.handle.net/10986/12720
id okr-10986-12720
recordtype oai_dc
spelling okr-10986-127202021-04-23T14:03:04Z India : Role of Self-Regulatory Organizations in Securities Market Regulation World Bank CENTRAL INDEPENDENT SRO EXCHANGE MARKET QUALITY EXCHANGE SRO SYSTEM HYBRID SRO STRUCTURE JOINT SRO SUBSIDIARY SECURITIES MARKETS SELF-REGULATION SRO SRO MEMBERS SELF-REGULATORY ORGANIZATION This Note identifies four main theoretical options for securities markets self-regulation in India, based on precedents from international markets. There is no single 'right' approach - the note outlines three options that employ Self Regulatory Organizations (SROs), which could be viable solutions for Indian capital markets. These are: (1) Restructure the existing Exchange SRO system to create a joint SRO subsidiary of the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). The new entity would be responsible for both market and member regulation. The Exchanges provide an existing platform for SRO functions that works reasonably well. This platform includes a governance structure, professional management, experienced staff, documented programs and procedures, and IT tools. But this option raises all of the issues on conflicts of interest at Exchange SROs. (2) Hybrid structure: NSE and BSE retain responsibility for market regulation, and create a new independent SRO for member regulation. This option is very similar to Association of National Stock Exchange Members of India's (ANMI's) proposal to create a member-based SRO (but the SRO should not be based on a trade association because of the significant conflicts of interest). It is based on the idea that supervising members is best done by a central regulator, but that regulating its own market is essential to an Exchange's market quality and brand. (3) New central independent SRO for both market and member regulation. A single independent SRO is theoretically the cleanest and efficient solution. But it is difficult to develop and in fact is only now in the process of being implemented in the USA and Canada. 2013-03-14T15:30:27Z 2013-03-14T15:30:27Z 2007-06 http://documents.worldbank.org/curated/en/2007/06/16450195/india-role-self-regulatory-organizations-securities-market-regulation http://hdl.handle.net/10986/12720 English en_US CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank Washington, DC Economic & Sector Work :: Policy Note Economic & Sector Work South Asia India
repository_type Digital Repository
institution_category Foreign Institution
institution Digital Repositories
building World Bank Open Knowledge Repository
collection World Bank
language English
en_US
topic CENTRAL INDEPENDENT SRO
EXCHANGE MARKET QUALITY
EXCHANGE SRO SYSTEM
HYBRID SRO STRUCTURE
JOINT SRO SUBSIDIARY
SECURITIES MARKETS SELF-REGULATION
SRO
SRO MEMBERS
SELF-REGULATORY ORGANIZATION
spellingShingle CENTRAL INDEPENDENT SRO
EXCHANGE MARKET QUALITY
EXCHANGE SRO SYSTEM
HYBRID SRO STRUCTURE
JOINT SRO SUBSIDIARY
SECURITIES MARKETS SELF-REGULATION
SRO
SRO MEMBERS
SELF-REGULATORY ORGANIZATION
World Bank
India : Role of Self-Regulatory Organizations in Securities Market Regulation
geographic_facet South Asia
India
description This Note identifies four main theoretical options for securities markets self-regulation in India, based on precedents from international markets. There is no single 'right' approach - the note outlines three options that employ Self Regulatory Organizations (SROs), which could be viable solutions for Indian capital markets. These are: (1) Restructure the existing Exchange SRO system to create a joint SRO subsidiary of the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). The new entity would be responsible for both market and member regulation. The Exchanges provide an existing platform for SRO functions that works reasonably well. This platform includes a governance structure, professional management, experienced staff, documented programs and procedures, and IT tools. But this option raises all of the issues on conflicts of interest at Exchange SROs. (2) Hybrid structure: NSE and BSE retain responsibility for market regulation, and create a new independent SRO for member regulation. This option is very similar to Association of National Stock Exchange Members of India's (ANMI's) proposal to create a member-based SRO (but the SRO should not be based on a trade association because of the significant conflicts of interest). It is based on the idea that supervising members is best done by a central regulator, but that regulating its own market is essential to an Exchange's market quality and brand. (3) New central independent SRO for both market and member regulation. A single independent SRO is theoretically the cleanest and efficient solution. But it is difficult to develop and in fact is only now in the process of being implemented in the USA and Canada.
format Economic & Sector Work :: Policy Note
author World Bank
author_facet World Bank
author_sort World Bank
title India : Role of Self-Regulatory Organizations in Securities Market Regulation
title_short India : Role of Self-Regulatory Organizations in Securities Market Regulation
title_full India : Role of Self-Regulatory Organizations in Securities Market Regulation
title_fullStr India : Role of Self-Regulatory Organizations in Securities Market Regulation
title_full_unstemmed India : Role of Self-Regulatory Organizations in Securities Market Regulation
title_sort india : role of self-regulatory organizations in securities market regulation
publisher Washington, DC
publishDate 2013
url http://documents.worldbank.org/curated/en/2007/06/16450195/india-role-self-regulatory-organizations-securities-market-regulation
http://hdl.handle.net/10986/12720
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