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Thread: Stock Exchanges now under RTI

  1. Are stock exchanges under RTI ambit?

    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.

  2. 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.

  3. Re: Are stock exchanges under RTI ambit?

    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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  4. Re: Are stock exchanges under RTI ambit?

    An interesting case to follow up now.

  5. #5
    C J Karira
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    Stock Exchanges now under RTI

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

    The summing up of arguments was as follows:

    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:


    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

    Full order can be viewed at:

  6. #6
    C J Karira
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    Re: Are stock exchanges under RTI ambit?

    Yes, now Stock Exchanges are under RTI Act 2005.

    Please see the following thread:

  7. #7
    C J Karira
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    Re: Stock Exchanges now under RTI

    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

  8. #8
    C J Karira
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    RTI Act to keep stock exchanges on high alert: experts

    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
    Last edited by karira; 18-06-07 at 11:55 AM.

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