Mumbai: The relatively new board of the Securities and Exchange Board of India (Sebi) under the new chairman, Ajay Tyagi, and two new board members is focusing its energy to first implement budgetary announcements. This was evident from the tone of Tyagi’s first press conference on Wednesday soon after the board meeting.
Here is a list of the budgetary announcements for the capital markets and where they stand as of now.
COMPLETED TASKS
Online registration for financial intermediaries: This has already been implemented by Sebi. There is an online portal on its website to facilitate online registration for mutual funds, brokers and portfolio managers, among others.
Linking Aadhar with demat accounts: In line with the government’s initiative to link all government issued documents and social schemes with Aadhar, steps have already been taken to link demat accounts to Aadhar. Brokerages have already issued instructions to their clients that this unique identification card be linked to their trading accounts.
Also read: First Sebi board meet under Ajay Tyagi sees sweeping changes in trading norms
APPROVED TASKS
Unified license: There was a budgetary announcement to have a single licence for brokers trading in the commodities and securities derivative markets. This was implemented where Sebi announced amendments to stock brokers’ regulations to enable one broker entity to function in both the markets. Sebi will issue final guidelines for operational framework. On the issue whether bank-backed brokerage firms be allowed to offer commodity products, Sebi is in dialogue with the Reserve Bank of India (RBI). The central bank has reservations in allowing banks to participate in commodity trading.
NBFC to be allowed as QIBs: The Sebi board also allowed systemically important non-banking financial companies (NBFCs) to be classified as qualified institutional buyers (QIBs). Half the shares in initial public offers (IPOs) are allotted to QIBs. Such NBFCs should have a net worth of at least Rs500 crore.
IN THE WORKS
Ease of business for FPIs: Foreign portfolio investors (FPIs), even under an eased regulatory environment of FPI regulations 2014, still struggle with multiple paper work. The budget had announced a common application form for registration, opening of bank and demat accounts, and issue of PAN (permanent account number). Sebi has already referred these terms to the Sebi working group and is in consultation with the tax department and the Reserve Bank of India (RBI). Considering the increased number of regulatory consultation, it may take a while to complete the process, but Sebi aims to release the rules for the same before the end of this calendar year.
Listing of units of ARCs: The budget announced that security receipts issued by a securitisation company or a reconstruction company such as asset reconstruction companies (ARCs) will be permitted to list and trade on stock exchanges. Sebi has referred the terms to its secondary market advisory committee and is in discussion with the RBI to finalise the modalities.