Social Stock Exchange

Subject: Economy

Context:

A SEBI-constituted panel on social stock exchange has suggested that non-profit organisations can directly list on such a bourse through issuance of bonds.

Concept:

• The panel was set up by SEBI in September 2019 under the Chairmanship of Ishaat Hussain to suggest possible structures and regulations for creating SSE to facilitate listing and fund-raising by social enterprises as well as voluntary organisations.
• Its recommendations:
• The social stock exchange (SSE) can be housed within the existing stock exchange such as the BSE and/or National Stock Exchange (NSE).
• Further, ranges of funding mechanisms have been recommended including some of the existing mechanisms such as Social Venture Funds (SVFs) under the Alternative Investment Funds.
• In addition, a new minimum reporting standard has been proposed for organizations which would raise funds under SSE.

Social stock exchange

• A social stock exchange is a platform that allows investors to buy shares in a social enterprise that has been vetted by the exchange.
• There are only a few international examples and they follow different models.
• In London, it acts more as a directory connecting social enterprises with potential investors, while in Canada the SVX is an online platform where even retail investors can invest in funds or companies with social impact.
• In India, the finance minister said the exchange will come under the ambit of the Securities and Exchange Board of India and mentioned that it will be “an electronic fundraising platform”, but the precise nature of its functioning is unclear so far.