Market regulator SEBI and Finance Ministry have come up with conflicting opinions over the applicability of Right to Information (RTI) Act on stock exchanges.
The view expressed by Securities and Exchange Board of India before the full bench of Central Information Commission (CIC) that bourses are "public authorities" is contrary to the opinion of Department of Economic Affairs (DEA).
The DEA has been maintaining that stock exchanges are not "public authorities" as defined in the RTI Act because they are regulated by SEBI and not the government.
This has created a peculiar situation for CIC, headed by Chief Information Commissioner Wajahat Habibullah, which is hearing RTI appeals to decide whether stock exchanges can be brought within the purview of the legislation.
The appeals came before CIC after Bombay Stock Exchange, National Stock Exchange and Jaipur Stock Exchange turned down the plea of brokers and investors seeking information about alleged market fraud that caused them losses as well as details about a broker who allegedly played foul.
The RTI applications were filed by an investor K Lall, Rajkumari Agrawal and Yogesh Mehta (ex-member broker), who suffered losses in the market.
NSE opposed the application maitaining that it cannot be treated as a "public authority" as the government did not have any control over its affairs. The bourse, through its counsel, has sought ten days for making detailed submission before CIC.
SEBI, which was represented by its Executive Director Sandeep P Parekh, submitted before the Commission that the government's concurrent control along with the regulator over stock exchanges bring them under the scope of RTI Act.
"As exchanges act as quasi-government bodies, though private, and as the control of the government on its affairs is pervasive, they should be recognised as public authority for the purpose of Right to Information Act," SEBI said.
Though stock exchanges do not receive financial aid from the government, but "pervasive control" of the government over their functioning cannot be denied, it said.
"NSE has been promoted by the government and it continues to own the single largest shareholding in the exchange, though they do not exercise direct control over the management, which is professionally run," the regulator added.