Govt. decides to allow Indian companies to list on foreign exchanges

Union Finance & Corporate Affairs Minister Nirmala Sitharaman on Friday said that Indian companies can now directly list their shares on foreign exchanges, more specifically at the exchanges operating at GIFT City-based International Financial Services Centre (IFSC) in Gujarat.

Union Finance & Corporate Affairs Minister Nirmala Sitharaman on Friday said that Indian companies can now directly list their shares on foreign exchanges, more specifically at the exchanges operating at GIFT City-based International Financial Services Centre (IFSC) in Gujarat.

“I had said in May 2020 that direct listing of securities by public Indian companies would be permissible in foreign jurisdictions. Now I am pleased to announce that the government has taken a decision to enable direct listing of listed and unlisted companies on the IFSC exchanges,” Ms. Sitharaman said.

“This is a major step forward to enable Indian companies to access global capital at better valuations,” she added.

The Finance Minister was in Mumbai to inaugurate a Limited Purpose Clearing Corporation (LPCC) mechanism called AMC Repo Clearing Ltd. (ARCL) and the Corporate Debt Market Development Fund (CDMDF) which will help in the development of a vibrant corporate bond market in India. The FM had made an announcement regarding this during her budget speech of 2021-22.

The LPCC has been set up with the purpose of clearing and settlement of corporate bond repo transactions and to develop an active repo market, which will, in turn, improve liquidity in the underlying corporate bond market. This institution will create a vibrant corporate bond repo market that allows market makers to access cost effective funding for their inventory, bondholders to meet their short term liquidity needs without having to liquidate their assets and entities with short term surpluses to deploy their funds in a safe and efficient manner.

In times of market dislocation, CDMDF on its part with access to ₹33,000 crore capital, will purchase and hold eligible corporate debt securities from participating investors (i.e., specified debt-oriented MF schemes to begin with) and sell as markets recover. The Scheme will act as a key enabler for facilitating liquidity in the corporate debt market and help quick response in times of market dislocation.

The Finance Minister said that the market for repo in government securities was one of the most liquid markets in the country. However, for repo in corporate bonds to take off, lack of Central counterparty had been cited as one of the reasons.