MUMBAI (Reuters) – A committee set up to propose rules for direct listing of shares at India’s International Financial Centre (IFSC) in GIFT City has recommended networking depository banks in the IFSC and the rest of the country to enable this.
A link between the depositories would enable the direct issuance of new common shares and the transfer of existing common shares, said the report published on Wednesday evening.
The IFSC operates as a separate financial authority with different rules than the broader Indian financial markets.
Earlier this month, Reuters reported that new rules, likely to come into force in April, will allow direct listing on GIFT City of Indian firms that are not yet listed on Indian stock exchanges.
“The ordinary shares of Indian companies issued and listed on the IFSC stock exchanges are therefore held directly by the shareholders in their dematerialised accounts maintained with the IFSC depositary,” the committee’s report said.
While the working group recommended this route as the preferred one, it also suggested other options, such as opening escrow accounts in the names of IFSC shareholders with Indian depository banks.
The group also suggested that Indian mutual funds could be allowed to participate in direct listings with the IFSC up to a limit of 1 percent of their assets under management.
Broker-dealers should also be allowed to act as market makers, it said.
The group also recommended a framework for dual listing, where a company is listed on both the Indian stock exchanges and the IFSC.
In such cases, the Indian market regulator’s rules, such as the minimum participation quota, would have to be enforced in both jurisdictions, the committee said.
(Reporting by Jayshree P. Upadhyay; Writing by Ira Dugal; Editing by Varun HK)
