SEBI Unveils Reform Steps, Briefs Board On NSE, NSEL Matters

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New Delhi: Sebi on Saturday announced review of norms governing stock exchanges, commodity derivatives market and reducing the listing time as part of reform measures while the regulator also apprised its board of actions taken in co-location issues related to NSE and the NSEL scam.

Besides, the market watchdog asserted that consistent tightening of norms have made the participatory notes less attractive for foreign investors amid persisting concerns over the instrument being used to channel illicit funds.

In efforts to deepen the commodities derivatives market, Sebi said it is committed to allowing options trading in the segment and looking at permitting institutional participation in a phased manner.

Further, a system of risk-based supervision for commodity brokers will be designed.

After public consultations, the regulations pertaining to stock exchanges and other market infrastructure institutions will be amended.

In this regard, Sebi’s board, which met here today, discussed the review of regulations and relevant circulars pertaining to market infrastructure institutions (MIIs) — stock exchanges, depositories and clearing corporations.

Earlier, the Bimal Jalan Committee had recommended reviewing the working of MIIs after five years.

“The 5-year period is over. Sebi has come out with many circulars and we would see how those changes can be incorporated in the regulations itself,” Sebi Chairman UK Sinha said after the board meeting here.

On allowing options in the commodity derivatives segment, Sinha said, “we are committed to doing it”.

In a slew of reforms for the next fiscal, Sebi will reduce the listing time for shares from six days after the IPO currently and allow security receipts issued by the asset reconstruction company to get listed.

Among others, the regulator has announced setting up a ‘cyber security lab’ for the securities market and a facility for online registration for market intermediaries.

The plan for action for 2017-18 was cleared by the board.

While addressing the board as part of customary post-Budget meeting, Finance Minister Arun Jaitley said the regulator is evolving in accordance with the needs of the economy and markets.

Today’s board meeting was also the last to be chaired by Sinha, whose tenure ends on March 1. The meet was also attended by Chairman-designate Ajay Tyagi, who is currently additional secretary with the finance ministry.

The regulator apprised the board of the actions taken with respect to alleged lapses involving the co-location facility of NSE. The board was also briefed about actions initiated against brokers in the National Spot Exchange Ltd (NSEL) scam.

The notional value of participatory notes to the assets under custody (AUC) of foreign portfolio investments has declined to 6.7 per cent in December 2016 from a high of 55.7 per cent in June 2007.

“Our feeling is that the measures taken by Sebi with regard to ODIs are sufficient enough to satisfy the SIT. But, if they come out with something new, then Sebi will have to take that…,” Sinha, whose tenure is ending next month, said after the board meeting here.

The Special Investigation Team (SIT) on black money, set up by the Supreme Court, had recommended a slew of measures, including the need for Sebi to come up with stricter norms for participatory notes.

The board was informed about the various aspects of ODIs and steps taken by the regulator after September 2014.

About the case of co-location issues related to NSEL, Sinha said “the status of investigation of Sebi regarding the broking firms and whether they are fit and proper or not was discussed and the board was apprised of the position”.

After addressing the Sebi board and top officials, Jaitley told reporters that the future agenda for the capital markets regulatory body, including evolving technological and policy changes, were discussed.

Sinha said the finance minister was informed about the developments as well as current issues Sebi and the market are facing.

“We had a very healthy discussion on that… We discussed various items for implementation, post Budget announcement,” he noted.