SEBI Reviews NSE’s ‘Permitted-to-Trade’ Framework for Own Share Trading
By Market Desk
SEBI is examining the ‘Permitted-to-Trade’ framework in response to NSE’s proposal to trade its own shares, addressing concerns about liquidity concentration.
The Securities and Exchange Board of India (SEBI) is set to examine its ‘Permitted-to-Trade’ (PTT) framework. This review comes after a proposal from the National Stock Exchange (NSE) to allow its shares to trade on its own platform.
A primary concern for the regulator involves the potential for liquidity concentration. This could arise if NSE shares trade on the NSE platform while their formal listing remains on the BSE.
Understanding the ‘Permitted-to-Trade’ Framework
The PTT framework enables a security to be traded on an exchange without being formally listed there. It provides a mechanism for securities to gain access to additional trading platforms.
- A security can trade on an exchange without formal listing.
- The company maintains its primary listing on another exchange.
- The company remains subject to all associated compliance requirements of its primary listing.
Regulatory Considerations for Market Infrastructure Institutions
Current regulations prohibit a stock exchange from listing its own shares on its own platform. Consequently, NSE’s shares are formally listed on the BSE, not its own exchange.
SEBI will assess the broader implications of the NSE’s proposal. This includes evaluating whether the existing PTT framework can be appropriately applied to market infrastructure institutions like stock exchanges.
The regulator has not yet formed a definitive view on the matter. The applicability of this framework to an institution such as the NSE requires further detailed examination.