PNGRB draft regulation caps individual stake in gas exchange to 15%
New Delhi: No shareholder can have more than 15% stake in a natural gas exchange, as per the draft regulations by the Petroleum and Natural Gas Regulatory Board (PNGRB). The draft, hosted on the PNGRB’s website, is the maiden attempt by India to build a regulatory framework for a gas exchange that would trade physical contracts. The draft lays out in detail the regulations regarding the setting up and operation of an exchange, membership, shareholding and settlement of trades. Anybody wanting to set up an exchange would require an approval from the PNGRB, which would have the power to regulate an exchange, call for information, order investigation and cancel authorisation if needed. “No person, other than a member of an authorised gas exchange, shall at any time, directly or indirectly, either individually or together with persons acting in concert, acquire or hold more than fifteen (15) percent of the paid-up equity share capital in an authorised gas exchange,” the draft says. For a member of the exchange, the shareholding has been restricted to 5% of the equity share capital, as per the draft, which caps the aggregate shareholding at 49% for all members. At least 51% equity capital of an authorised clearing corporation shall always be held by one or more gas exchanges. But no clearing corporation can hold any stake or interest of any nature in the gas exchange, as per the draft. The number of independent directors cannot be less than the number of shareholder directors on the board of the gas exchange and the clearing corporation. Every clearing corporation or gas exchange shall establish and maintain a settlement fund for each category of product authorized by the regulator to guarantee the settlement of trades executed. An exchange would have four types of members, including trading members, clearing members and proprietary members.