Stock Exchanges now under RTI

[ganpat1956]

New Delhi: Market regulator SEBI and Finance Ministry have come up with conflicting opinions over the applicability of Right to Information (RTI) Act on stock exchanges.

The Securities and Exchange Board of India told the bench of Central Information Commission (CIC) that bourses are not "public authorities" contrary to the opinion of Department of Economic Affairs (DEA).

The DEA has been maintaining that stock exchanges are not "public authorities" as defined in the RTI Act because they are regulated by SEBI and not the government.

This has created a peculiar situation for CIC, which is hearing RTI appeals to decide whether stock exchanges can be brought within the purview of the legislation.

The appeals came before CIC after Bombay Stock Exchange, National Stock Exchange and Jaipur Stock Exchange turned down the plea of brokers and investors seeking information about alleged market fraud that caused them losses as well as details about a broker who allegedly played foul.

The RTI applications were filed by an investor K Lall, Rajkumari Agrawal and Yogesh Mehta (ex-member broker), who suffered losses in the market.

NSE opposed the application maintaining that it cannot be treated as a "public authority" as the government did not have any control over its affairs. The bourse, through its counsel, has sought ten days for making detailed submission before CIC.
http://www.ibnlive.com/news/are-stock-exchanges-under-rti-ambit/39382-16.html

[maneesh]

I conceive that the Public Limited Company should rightfully be under RTI.

As the information required is in the larger public interest. There are clauses under section 8 which will ensure that the genuine economic interest of the company is not compromised.

[ganpat1956]

Exchanges under RTI ambit: Sebi

The market regulator has said the country’s stock exchanges are “public authorities” and, therefore, have to disclose information, if asked to, under the provisions of the Right to Information (RTI) Act.

Currently, any request for information from the stock exchanges has to be routed through Securities and Exchange Board of India (Sebi). While this will make it easy for investors to obtain information from the exchanges, some experts said it could lead to disclosure of sensitive information regarding trades and could be misused by people. Representatives of India’s largest exchange, the National Stock Exchange, said they were studying the matter and would need more time to respond.

The RTI Act defines a public authority as one that is created by a notification issued by the government or a law passed by Parliament. Stock exchanges are owned by private investors or brokers and have independent managements. NSE is an exception—the majority equity of some of its large shareholders, such as the State Bank of India, is owned by the government. Sebi has said that despite their independence in operations, stock exchanges ought be classified as public authority as they can start business only if they are notified by the government.

Sebi’s written submission to the Central Information Commission (CIC), the body that oversees applications made under the RTI Act, comes in the context of requests by investors for information from the National Stock Exchange and the Jaipur Stock Exchange. Both exchanges had refused to provide the information and the investors appealed to CIC.

The commission had written to Sebi asking for its opinion and the regulator has replied that the exchanges were indeed beholden to provide information under the RTI Act.

Stock exchanges collect detailed information on trades executed by brokers and foreign institutional investors, including some confidential information on the identity of the clients, said a person associated with one of India’s leading exchanges who did not wish to be identified. It is usually brokers who want such information, added this person, and “history often shows that (only those) brokers suspected to be part of any price manipulation move seek information on other brokers.”

Sebi has stringent rules regarding the leakage of price-sensitive information.

The RTI Act should not apply to stock exchanges, said Somasekhar Sundaresan, partner, J Sagar Associates, and a specialist in laws regarding securities. He added that exchanges were commercial pro-fit-oriented organizations operating under licensing terms imposed by Sebi. “A lot of information with stock exchanges is sensitive data and the scope for misuse of the law is high,” said Sundaresan. People who really wanted to get information for the right reas-ons, he added, could do so ev-en now because “there would be a legal framework within the exchange’s by-laws” or by using “the RTI Act through Sebi.”

In its response to CIC, Sebi wrote that the Union government has considerable powers over stock exchanges, including the right to call for periodic returns, amend by-laws and supersede the governing body of the exchange. The regulator inferred that this was sufficient evidence to term exchanges “public authorities”. “It may, however, be noted that the New York Stock Exchange (in contrast) was not found to be an agency of the state under the Freedom of Information Act,” Sebi’s response added.

Independently, the market regulator has forced those Indian exchanges owned and controlled by broker-me-mbers to reduce their holding to 49%. NSE was never owned by broker members; it was, instead, promoted by a few financial institutions. BSE, however, was owned and controlled by broker-members until the middle of May. It’s now only 48-49% owned by broker-members.

Exchanges under RTI ambit: Sebi - livemint

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[kushal]

An interesting case to follow up now.

[karira]

The CIC has ruled that Stock Exchanges are under the perview of RTI Act 2005.

The summing up of arguments was as follows:


29.

In view of the decision of the Delhi High Court cited above which has

been affirmed by the Hon’ble Apex Court, a stock exchange is a “state” within
the meaning of Article 12 of the Constitution of India and as such it is
amenable to the writ jurisdiction of the superior courts. In view of this, it has
been submitted on behalf of the SEBI that the term ‘public authority’ is broader and
more generic than the word ‘state’ under Article 12 of the Constitution of India. Every
authority or institution which is a ‘state’ has to be a public authority under Section
2(h) of the Right to Information Act, 2005. Even a non-governmental organization if
substantially financed directly or indirectly by funds provided by the Government
may be a public authority. Even a private institution substantially financed by an
appropriate Government can also be a ‘public authority’ but such non-governmental
bodies or such private institutions or bodies may not be categorized as ‘state’ but
they would be public authorities within the meaning of Section 2(h) of the RTI Act.
There is enough merit in these submissions and the Commission agrees that an
authority or an institution or a body if it is a “state” within the meaning of Article 12 of
the Constitution of India, it cannot claim that it is outside the purview of the Right to
Information Act, 2005.

The decision was:

30.

The Commission, therefore, decides and holds that a stock exchange

being a quasi governmental body working under the statute and exercising
statutory powers has to be held to be a “public authority” within the meaning
of section 2(h) of the RTI Act, 2005. The Jaipur Stock Exchange and National
Stock Exchange of India Limited are directed to put in place a RTI regime in their
respective organizations within a period of one month from the date of receipt of this
decision. They should appoint and notify the Central Public Information Officers and
an officer senior to him to act as an appellate authority under the Act.They are
directed also to comply with the mandated obligations under Section 4(1) of the RTI
Act. Other Stock exchanges are, however, allowed to comply with the requirements
of the RTI Act within a period of 3 months from the date of receipt of this order.
However, since the other stock exchanges have not been heard in the matter, they
may file written submissions, if any, within a period of one month from the date of
receipt of this order so as to enable the Commission to grant them a post decisional
hearing.

Full order can be viewed at:

http://cic.gov.in/CIC-Orders/Decision_07062007_29.pdf

[karira]

Yes, now Stock Exchanges are under RTI Act 2005.

Please see the following thread:

Stock Exchanges now under RTI

[karira]

Just another point of view.
I don't agree with what this writer is saying.

<table class="TableClas" border="0" cellpadding="0" cellspacing="0"><tbody><tr><td class="heading">Every licensee is not a public authority</td></tr><tr><td height="11"></td></tr><tr><td class="byline">WITHOUT CONTEMPT</td></tr><tr><td height="12"></td></tr><tr><td class="author">Somasekhar Sundaresan / New Delhi June 14, 2007</td></tr><tr><td height="4"></td></tr><tr><td style="background-image: url(/images/common/gn_005.gif); background-repeat: repeat-x;"></td></tr><tr><td height="9"></td></tr></tbody></table>The author is a partner of JSA, Advocates & Solicitors. The views expressed herein are his own

Every licensee is not a public authority

[karira]

RTI Act to keep stock exchanges on high alert: experts

NEW DELHI: The Central Information Commission's (CIS) decision to bring stock exchanges within the purview of RTI Act will keep the bourses on high alert and ensure that necessary information is made available to public in cases of manipulation by operators, feel experts.

"The RTI Act will ensure that stock exchanges reveal information to investors on suspected cases of manipulation," said, investment consultant Prime Database's Managing Director Prithvi Haldea.

However, he added, the decision of the CIC would not cut much ice as enough transparency is available in working of the stock exchanges since their corporatisation.

"The stock exchanges are no more fiefdoms of brokers and manipulators," Haldea said adding they are monitored by market regulator Securities and Exchange Board of India (SEBI) on a daily basis.

The CIC order, said Diljeet Titus, senior partner of the corporate law firm Titus and Co, "will keep stock exchanges on high alert and ensure that they remain vigilant and transparent."

The decision, he added, would open yet another window for investors to seek information from the stock exchanges and pursue legitimate interests.

In an era of transparency when bulk of the commercial information is available in public domain, Titus said, "it will not be in the public interest to hide or withhold information."

The CIC in its recent order, overruling the objections of the finance ministry and National Stock Exchange (NSE), held that bourses being "quasi-governmental body" are public authorities and hence would come within the purview of the Right to Information Act.

RTI Act to keep stock exchanges on high alert: experts-Stocks News-Stocks-Markets-The Economic Times

[ganpat1956]

Information commission's order on stock exchanges stayed

In a setback to private investors, the Delhi High Court Wednesday stayed a Central Information Commission (CIC) order directing authorities to bring the stock exchanges under the purview of the Right to Information (RTI) Act.

Justice B.D. Ahmed stayed the CIC's June 7 order on a petition by National Stock Exchange (NSE), while issuing notices to the market regulator, Securities Exchange Board of India (SEBI), the union ministry of finance and the CIC to file their replies.

The NSE had approached the high court, challenging the CIC's decision to open up the bourses under the new act.

Appearing for the NSE, senior counsel Gopal Subramanium argued that information under the RTI Act could be sought only from the government organizations or its agencies and not against a company.

India eNews - Information commission's order on stock exchanges stayed

[karira]

HC stays order bringing stock exchanges under RTI

Court buys NSE view that bourses do not come within definition of state; asks Sebi, CIC, Finance Ministry, to file replies

New Delhi: The Delhi High Court on 4 July stayed an order of Central Information Commission bringing stock exchanges under the purview of Right to Information (RTI) Act.

Acting on a petition by National Stock Exchange, a bench of Justice B D Ahmed also issued notices to market regulator Sebi, Ministry of Finance and CIC seeking their replies. The court asked them to submit affidavit within four weeks and file rejoinder, if any, in four weeks thereafter.

NSE had challenged CIC’s decision of 7 June to open up the bourses under the transparency legislation.

Gopal Subramanium, the counsel for NSE, contended that bourses did not come within the definition of the state and so, cannot come under the purview of RTI Act.

Subramanium, who is also Additional Solicitor General, said information under RTI can be sought only against the government or its agencies and not against a company. NSE is a company incorporated under the Companies Act, he said.

Organisations which come within the ambit of RTI Act should be constituted, controlled and substantially funded by the central or the state government. Stock exchanges do not fit in the definition and their board of directors are not appointed by the government, he added.

Contesting the government’s view it had no control on bourses, the Sebi counsel said it monitored exchanges and the regulator was a government body.

On this, the Bench remarked: “Everybody is governed by one or the another government body.”

The CIC had last month on a plea by two investors against NSE and Jaipur Stock Exchange directed all bourses to comply with RTI rules within three months. It had also directed JSE and NSE to put in place an RTI regime within a month.

The Commission had said that stock exchanges being quasi-governmental bodies working under the statute and exercising statutory powers have to be held a ‘public authority’ within the meaning of the RTI Act.

Sebi had then argued it had, along with the government, concurrent control over functioning of stock exchanges.



HC stays order bringing stock exchanges under RTI - livemint

[karira]

Bourses under RTI? SC to decide

Dragged to courts by stock exchanges, Central Information Commission now wants the Supreme Court to resolve whether bourses can be brought under the purview of the Right to Information Act or not.

"One case is in the Bombay High Court and one case is in the Delhi High Court (over the issue of bringing bourses under the transparency legislation). We are now moving to get those cases transferred to the Supreme Court," chief information Commissioner Wajahat Habibullah told PTI.

The Commission, in response to RTI applications, held in September that stock exchanges are 'public authority' within the meaning of the RTI Act 2005 and would have to comply with the provisions of the transparency legislation.

The decision, however, did not go down well with the Bombay Stock Exchange and National Stock Exchange, which in separate petitions challenged it in the Bombay High Court and Delhi High Court respectively.

Elaborating on the stand of the Commission, Habibullah said: "SEBI strongly argued for the decision we gave, some stock exchanges argued against it. Now, what will happen in that case I do not know."

When asked whether a stock exchange such as BSE, which is not a government body, will fall within the definition of a public authority, he clarified: "A public authority means any authority, body or institution of self government established or constituted by the Constitution, any law made by Parliament or state legislature by any notification made by appropriate government."

"It would also include any body owned, controlled or substantially financed directly or indirectly by funds provided by the government," Habibullah said.
"All stock exchanges are created by orders of SEBI. In passing the orders of registering the stock exchanges, it is exercising the authority of the government," he added.

Earlier in June, CIC had ruled that stock exchanges come under the RTI purview and had asked all the bourses to comply to the RTI rules within three months.

A bench headed by Habibullah had termed the government's control over the functioning of stock exchanges as pervasive and said that bourses can not be exempted from sharing information under the provisions of the Act.

While SEBI has supported CIC's contention that stock exchanges are quasi-government bodies and should be brought under the RTI Act, finance ministry's department of economic affairs (DEA) differed with this opinion.

Currently, any request for information from the stock exchanges has to be routed through SEBI. SEBI has earlier said in its submission to the CIC that despite stock exchanges' independent operations, they ought to be classified as public authority as they can start business only if they are notified by the government.

The RTI Act defines a public authority as one that is created by a notification issued by the government or a law passed by the Parliament.

Bourses under RTI? SC to decide

[nihitagarwal]

Hi! Ppl..
Im a law student in final year. Im planning to write an article on "Stock exchange under the ambit of RTI Act". It would be great help if some one could provide me with some material.
thanx

[karira]

Nihit,

Just go through the above thread and all the links provided in the posts.

I can assure you that this is the most comprehensive place to get all the information about Stock Exchanges and RTI.

[murgie]

Originally Posted by nihitagarwal

Hi! Ppl..
Im a law student in final year. Im planning to write an article on "Stock exchange under the ambit of RTI Act". It would be great help if some one could provide me with some material.
thanx

You will need to do some work searching thru this site. Also study threads illustrating how some other private institutions -- e.g. schools -- fall under RTI because of substantial public aid. The DIRECTORY segment of this site has some examples. Whether significant potential public consequences, or significant public regulation, is also enough to satisfy the language in the RTI Act --- or since I am biased, how to argue those conditions satisfy the RTI Act's language -- is one key question. A short summary posted here would be helpful. Best,

Murgie