Govt withdraws recognition of Delhi Stock Exchange after finding irregularities

The government has formally withdrawn the recognition of Delhi Stock Exchange, more than a year after capital market regulator Sebi derecognised the bourse citing "serious irregularities" in its functioning.

DSE was among the few bourses that were given permanent recognition by the Securities and Exchange Board of India (Sebi), as per information available on the regulator's website.

In a notification dated March 16, the Finance Ministry said the recognition granted to the Delhi Stock Exchange Ltd "stands withdrawn".

Under certain provisions of the Securities Contracts (Regulation) Act, 1956, the recognition to a recognised stock exchange can be withdrawn if it "has not been corporatised and demutualised within the specified time".

In August 2005, Sebi had notified DSE Ltd (Corporatisation and Demutualisation) Scheme, 2005. The bourse was to be demutualised on or before the August 28, 2007.

Under demutualisation, management and trading at a stock exchange are separated while corporatisation refers to running a bourse like a company.

After finding "serious irregularities" in its functioning, Sebi had earlier decided to withdraw recognition granted to the exchange.

"I note that serious irregularities have been found in the functioning of Delhi Stock Exchange at the time when DSE was taking steps for demutualisation," Sebi Whole Time Member Prashant Saran had said in an order dated November 19, 2014.

"It is seen that for completing the demutualisation process the erstwhile board of DSE had overlooked the due transfer of shares in demat accounts and receipt of funds by the appointed date," the order had said.