The Securities and Exchange Board of India (SEBI) is set to examine the ‘Permitted-to-Trade’ (PTT) framework in the context of the National Stock Exchange’s proposal to allow its shares to trade on its own platform, a highly placed source said.
The regulator is expected to assess the merits of the proposal and its wider implications, including whether the existing PTT framework can be applied to market infrastructure institutions such as stock exchanges.
The key issue likely to come under scrutiny is liquidity concentration. If NSE shares are permitted to trade on the NSE platform while remaining formally listed on the BSE, trading activity in the security could potentially get concentrated on one exchange.
PTT is distinct from formal listing. Under the framework, a security can be permitted to trade on an exchange without being formally listed there. The company continues to remain listed on its primary exchange and remains subject to all applicable compliance and disclosure requirements.
The proposal assumes significance because existing regulations do not permit a stock exchange to list its own shares on its own platform. NSE’s shares are formally listed on the BSE.
A highly placed source said the proposal, if made, would be examined by the regulator keeping in mind all relevant aspects, including liquidity.
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The proposal could potentially provide NSE shares access to an additional trading platform without changing their formal listing status.
However, SEBI is yet to take a final view on the proposal, and the framework’s applicability to a market infrastructure institution such as NSE will need to be examined.
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