Here are top 10 Sebi announcements:
1) Crackdown on finfluencers
The Securities and Exchange Board of India (Sebi) has approved finfluencer norms, prohibiting regulated entities like brokers from dealing with them. Under the norms, the Sebi regulated entities and their agents are barred from having any association directly or indirectly with any other person who provides advice or recommendation in respect to securities. The regulated entities cannot have any transactions involving money, referral of a client, interaction of information technology systems or any other association with the unregulated ones.
However, the above restriction will not apply to persons regulated by the board or its agents for their association with persons who are exclusively engaged in investor education and do not, directly or indirectly, provide advice/ recommendation/ claim of return or performance.
Commenting on the move, Anshul Arzare, MD and CEO of YES Securities India said that, “As financial intermediaries, it is our fiduciary responsibility to assist clients in all neutrality, without any biases. Associating with unregistered financial influencers undermines this and poses significant risks to investors. We fully support SEBI’s initiative,” Arzare said, adding that equities is a game of patience and unrealistic expectations around returns and impatience are detrimental to equity investors.2) Stock’s entry,exit from F&O segmentThe regulator revised the eligibility criteria for the entry and exit of stocks in the derivatives segment of exchanges. Under the new norms, the criteria for exit shall apply to only those stocks which have completed at least 6 months from the month of entry into the derivatives segment. The last revision in such selection criteria was carried out in 2018.Further, for existing stocks in the derivatives segment, the exit criteria on the basis of performance would be applicable 3 months after the date of issuance of circular.Also Read: Sebi revises eligibility criteria for entry, exit of stocks in derivatives market
“The SEBI announcements clearly reflect this analogy with their announcements focused on ease of doing business while still keeping the fair investor treatment in mind. One of the key highlights of how SEBI values the fair treatment of investors is the difference that was clearly articulated between investor education and investor advice to restrict the rampant social media echo chambers doling out investor advice,” Vivek Iyer, Partner, Financial Services, Grant Thornton Bharat said.
3) Flexibility in voluntary delisting
With an aim to promote ease of doing business and to protect the interest of investors, Sebi has provided flexibility in the voluntary Delisting framework. It has approved the introduction of Fixed Price process as an alternative to Reverse Book Building process (RBB) for delisting of companies whose shares are frequently traded. The fixed price offered by an acquirer shall be with at least 15% premium over the floor price as determined under Delisting Regulations.
The Sebi board also cleared the deck for introduction of an alternate delisting framework for listed Investment Holding Companies (IHC) through scheme of arrangement by way of selective capital reduction.
A listed IHC will be permitted to transfer the underlying equity shares held by it in other listed companies to its public shareholders proportionately. It will also be permitted to make proportionate cash payments to its public shareholders against other assets including investments in land, building, unlisted companies etc.
4) Ease of doing business for FPIs
In order to facilitate ease of doing business for FPIs, the Sebi Board approved a proposal to exempt University Funds and University related Endowments, registered or eligible to be registered as Category I FPI, from additional disclosure requirements.
SEBI’s decision to extend the reporting timeframe from 7 days to 30 days for disclosure of material changes is a practical move, Narinder Wadhwa, National President at CPAI said. “It acknowledges the complexities involved, especially with multiple teams operating across various jurisdictions. This extended timeline offers a more reasonable window, particularly beneficial for Foreign Portfolio Investors (FPIs),” he said.
In August last year, Sebi mandated FPIs to disclose detailed information about entities holding any ownership, economic interest, or control in them, without any threshold.
Beta version of optional T+0 settlement Post the launch of the Beta version of the optional T+0 settlement, Sebi will continue to do further stakeholder consultation, including with the users of the version, we feel It is the right approach to understand the need of investors and use case .we compliment SEBI for this consultative approach before implementation..of any rules and regulations or new segments.
5) Debt securities norm tweaks
The regulator also green-lighted a proposal to streamline the public issue process for debt securities and Non-Convertible Redeemable Preference Shares (NCRPS). The new rules would enable faster access to funds to issuers through reduction in the period for seeking public comments on the draft offer documents from 7 working days to 1 day for issuers whose specified securities are already listed and 5 days for other issuers. The board has also allowed reduction in the minimum subscription period to 2 working days from 3 working days.
6) Ease of doing business for INvITs and (REITS)
The Board approved the following proposals to facilitate ease of doing business related to activities of InvITs and REITs. Among major decisions is the reduction of the trading lot for privately placed InvITs to rupees 25 lakhs. The Investment Manager of InvIT / Manager of REIT will be able to convene a meeting of the unitholders by giving a notice shorter than 21 days subject to prior consent of the unitholders.
On REITs and InvITS, Iyer of Grant Thornton said that infrastructure is one of the key drivers of growth in India and allowing investors an increased access to this theme through investments in REITs and INVITs in the form of a reduced lot size is reflective of the forward looking approach by the capital markets regulator.
7) Guidelines for borrowing by Category I and II AIFs
The Board approved a proposal to expressly permit Category I and II AIFs to borrow for a period of up to 30 days for the purpose of meeting temporary shortfall in drawdown from investors, while making investments. The cost of any such borrowing would need to be charged to the specific investors responsible for the shortfall. Further, with a view to curtail any possible roll-over of borrowing, there shall be a cooling-off period of thirty days between two borrowings availed by Category I and II AIFs.
8) Fee collection by SEBI registered investment advisers/research analysts
Sebi Board approved the proposal to facilitate a mechanism on an optional basis for fee collection by SEBI registered investment advisers (IAs) and research analysts (RAs) who will be required to create a closed ecosystem thereby giving investors comfort that they are interacting with registered IAs and RAs. The mechanism shall facilitate investors for availing the services and making the payment of fees only to registered IAs and RAs thus creating trust in the ecosystem.
9) Market Infrastructure Institutions
With the objective of providing basic minimum criteria for assessing the performance of stock exchanges, clearing corporations and depositories in terms of the requirements, the Board approved broad minimum criteria/parameters which will be considered by external evaluators. Such external evaluation will take place once in every 3 years with the first such assessment to be conducted within 12 months from the date of implementation of this
mechanism
10) Cybersecurity and Cyber Resilience Framework (CSCRF) for SEBI Regulated Entities (REs)
The Board has cleared the framework for Sebi regulated entities. The CSCRF framework provides a structured methodology to implement various solutions for cybersecurity and cyber resiliency. CSCRF will assist the regulated entities in strengthening the security posture.
Also Read: F&O Rollover: FIIs bullish on index in July series with net longs; what’s in store for Nifty?
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