In continuation of the capital market reforms undertaken by SEBI, the latest one is the creation of the Central Listing Authority. The presence of the CLA will certainly do away with the problem of multiple listings, and make a positive impact on the Indian capital markets.

The regulators all over the world are facing the challenge of low performing regional exchanges and India is not an exception. The general perception is that a healthy environment in the capital market can be created by a limited number of exchanges. For facilitating effective and speedy transactions in the exchanges, each exchange needs to be well-equipped with modern technologies. Can all the stock exchanges afford upgrading the existing technological environment to keep themselves in the race? Technological know-how available in many regional exchanges is another concern let alone the cost of setting up of the required technological infrastructure.

The need for a lesser number of exchanges is argued on one more point. With the advanced technologies, capital market activity can reach easily to every nook and corner of the country without much of a problem. If an exchange has to function efficiently, it needs to attain a minimum turnover. This is required to ensure adequate liquidity and price discovery to the investors.

In the scenario, as many of the Indian stock exchanges have failed to discharge their minimum responsibilities associated with listing of securities efficiently, a Central Listing Authority (CLA) was proposed to be set-up by Sebi in April 2002 and it came into existence from April 2003. The purpose of establishing a Central Listing Authority is to formulate common guidelines for listing of securities in the stock exchanges of the country. It will not be a regulatory body and may work under the supervision of the Sebi. It is proposed that the CLA will bring uniformity in the due diligence process and in scrutinizing listing applications across the stock exchanges. With the establishment of the CLA, it is not required for a company to list in as many stock exchanges in which it is to be traded.

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