Friction #12: SEBI’s confusing exchange plans, Vedanta’s cheap bid

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Editor's note: Two important events from last week fit perfectly into Friction’s universe of corporate governance. On Wednesday, the Securities and Exchange Board of India issued a discussion paper (surprisingly low on details) to review “ownership and governance” of stock exchanges and depositories.  On Saturday, Anil Agarwal-helmed Vedanta Ltd announced an open offer by its parent to acquire a 10% stake from public shareholders at a discount of 12% to the stock’s prevailing market price. Clearly, despite last year’s drama of a failed delisting and minority investors crying foul, nothing can deter the company from its chosen path of acquiring its shares cheaply.  Turning the clock back? In a bare-bones, 10-page discussion paper, the markets regulator presented its policy intent—that it wants to undo the past decade’s slow and painstaking effort to shutter a plethora of regional stock exchanges and the clean-up of national exchanges brought about by diversifying ownership.  Without providing data, reasoning or an explanation of the benefits of its proposals, SEBI is looking to revolutionize ownership of exchanges, which had earlier been mired in controversy, court battles and politics.  …