Bourses trim brokers' nos. in governing body

NEW DELHI: The government has proposed to limit the representation of the stock brokers on the governing council of the stock exchanges to 25% in the demutualised and corporatised stock exchanges.

A proposal to amend the Securities Contracts (Regulation) Act 1956 to allow demutualisation and corporatisation of exchanges to be considered by the union cabinet on Wednesday has proposed to hike the penalties on offences to maximum of Rs 25 crore and the imprisonment for certain offences to 10 years.

It may be recalled that the NDA government had moved the union cabinet in July 2003 to make similar changes to the Securities Contracts (Regulations) Act, 1956.

The bill had been introduced in the Lok Sabha in August, 2003 and then referred to the standing committee on finance for examination.

The proposal before the union cabinet has also suggested that the definition of securities to be expanded to include the unit of mutual funds.

The amendments are in line with the suggestions made by the Justice Kania committee that went into the issue of demutualisation and corporatisation of the 23 stock exchanges. Only two exchanges—NSE and OTCEI—operate as demutualised model.

The amendments will also give effect to the recommendations of the Joint Parliamentary Committee that probed the market scam and submitted its report in December 2002.

Sources close to the development said the amendments to the Act would also confer powers on the central government to grant immunity in certain cases.

The finance ministry has moved a proposal to make certain amendments to the Depositories Act, 1996 to be considered in conjunction with the amendments to the SCRA. It is also proposed to amend the SCRA to allow appeals to orders to Securities Appellate Tribunal to lie with the Supreme Court.