Mumbai: The Bombay Stock Exchange (BSE Ltd.), Asia’s first stock exchange, has received recognition as a ‘Designated Offshore Securities Market’ (DOSM) from the United States Securities and Exchange Commission (SEC) under Rule 902 (b) of Regulation S under the U.S. Securities Act of 1933.
BSE, becomes the first stock exchange in India to receive DOSM recognition and now joins an elite list of foreign securities exchanges that have been recognized as DOSMs by the SEC.
The recognition by the SEC speaks about the comparability of the international regulatory framework adopted by BSE, governing its structure, organization and disclosure standards. Companies listed on BSE can feel confident of the exchange being a listing venue of choice and comparable with a handful of exchanges globally, recognized for their standards by the SEC.
Advantages of the DOSM status
In brief, the DOSM status allows sale of securities to US investors through the trading venue of BSE without registration of such securities with the US SEC and thus eases the trades by US investors in India.
Previously, equity and bond securities listed and traded on BSE and issued in the U.S., could not generally be resold in non-prearranged trades executed through the facilities of BSE’s trading platform, without requiring that the seller forms a reasonable belief that the buyer is outside the U.S.
Thus, effecting such transactions with U.S. persons without any restrictions under the Securities Act, 1933 was problematic. This will now be facilitated after BSE’s recent recognition as a DOSM. The status of DOSM will provide significant advantages that can facilitate securities offerings by BSE-listed companies, particularly to U.S. investors. For instance, BSE-listed securities, originally issued in the U.S., in transactions that are exempt from SEC registration, may be freely resold on BSE.
This is expected to primarily benefit securities issued in U.S. private placements to institutional investors. The availability of a liquid resale market is expected to make exempt offerings by BSE-listed companies more attractive to U.S. investors.
The recognition will also enhance the attractiveness of Indian Depository Receipts (IDRs) amongst US investors. BSE’s new status will provide additional benefits to companies whose securities are traded both in the U.S. and on BSE. Certain directors and officers of dual-listed companies will be permitted to resell their securities on BSE, regardless of any restrictions or holding periods that may apply under U.S. securities laws. Finsec Law Advisors, acted as the sole counsel for BSE in securing the DOSM status and represented BSE before the SEC.
“We are delighted to receive the designated offshore securities market status” said Ashishkumar Chauhan, MD & CEO, BSE.
“This is an important recognition of our endeavours not only to be the most modern platform technologically, but to also provide a globally recognised, well-regulated and well-governed venue for global investors who are looking at India with even more interest. With this status, we will continue our growth of listings and also aim to become an even better place to enable investments into India by US investors.”