Don’t Misuse Your Oligopolistic Position, SEBI Chairman Tyagi Tells Exchanges
The equity bourses should refrain from using their "oligopolistic" position and not charge "exorbitant and unreasonable" fees from investors, Securities and Exchange Board of India Chairman Ajay Tyagi said on Tuesday.
Exchanges are the first line of regulation and they should ensure that their conduct on aspects like governance is "above board", he said, while speaking at an event to commemorate the silver jubilee of the NSE, which since its inception has become the market leader overtaking the 144-year-old much older BSE by a huge margin.
"Stock exchanges should abstain from misusing their oligopolistic position by having an exorbitant and unreasonable fee structure," Tyagi said.
It can be noted that the NSE, which commands almost two-thirds of the market by volume, has been mired in a slew of controversies like the co-location case which have exposed chinks in its governance structure.
Tyagi said while exchanges are for-profit commercial entities, they should also devote some resources for their regulatory functions as they are the first level of regulation.
While discharging these functions, the exchanges will also have to ensure that their practices are "above board", the SEBI chairman said, reminding the exchanges that powers come with responsibilities.
The exchanges also ought to be following governance norms which are much better than brokers and the entities being traded on their platform, he said, adding, "the conduct of market infrastructure institutions has to be above board by displaying integrity and work culture."
Tyagi said trust is a very important in business and underlined that while ease of doing business is important, protection of investor interest is "more important".
Though our capital market institutions are of global standards, Tyagi said we have a long way to go, as the overall market capitalisation is only 78 percent of gross domestic product as against more than 125 percent in developed markets like the U.S.
Tyagi said banks' woes with non-performing assets underlines the need for deepening the corporate bond markets a priority as it can help companies access the required capital.
Retail investors also need to be given extra focus and be made a part of the capital market story, he said.