Skip to main content

Sebi nod for universal exchanges from Oct 18

Sebi nod for universal exchanges from Oct 18
Norms for mutual funds tightened; decision on loan default disclosure deferred
The Securities and Exchange Board of India (Sebi) on Thursday said exchanges would be allowed to deal in both equities and commodities from October 2018,amove that would benefit the National Stock Exchange (NSE), the BSE, and the Multi Commodity Exchange (MCX), which currently trade in either of the two categories.
The capital markets regulator also announced easier access norms for foreign investors and capped crossholdings in credit rating agencies (CRAs) as well as mutual funds (MFs) to safeguard investors´ interest.The concept of universal exchanges was in the works since the commodities regulator, Forward Markets Commission (FMC), was merged with Sebi in 2015
Earlier this year, Sebi allowed single intermediaries, such as brokers, to deal in both commodities and equities underasingle licence.Sebi said the steps needed for allowing universal licence were being put in place and the amended Stock Exchange and Clearing Corporation (SECC) regulations would become effective from October 1, 2018.
Exchanges welcomed Sebi´s decision, saying they would venture into new segments.The BSE, which currently offers trading in equities and currency derivatives, said it had “geared up itself for long” to provide new facilities.Shares of the BSE gained 3 per cent, while those of the MCX declined 1 per cent on Thursday, even though Sebi´s announcement came after the market hours.
Market players said the move would increase competition in the commodities trading space with the foray of stronger players such as the NSE and the BSE. Vikram Limaye, managing director and chief executive officer of the NSE, said, “The NSE will certainly get into commodities once Sebi approves exchanges to get into all asset classes.
We will await further guidelines from Sebi in this regard.” Addressing the media after the board meeting, Ajay Tyagi, chairman, Sebi, said the regulator´s approval would be needed prior to launching trading in new segments.The Sebi board also puta10 per cent cap on cross shareholding and curbs on board positions for both MFs and CRAs
In the case of MFs,asponsor will be allowed to hold above 10 per cent in only one asset management company (AMC). The move will hit UTI MF, which has four sponsors, including State Bank of India, Life Insurance Corporation of India, Bank of Baroda, and Punjab National Bank.

Each of them holds an 18.5 per cent stake in UTI MF and also owns MF subsidiaries.In the past, UTI MF has struggled to address its shareholding issue, with each of the stakeholders being adamant on the dilution.Tyagi said MFs would get one year to bring down their shareholding after Sebi notifies the new norms.

Experts said the shareholding cap was to avoid conflict of interests.In June, Crisil had bought an 8.8 per cent stake in rival CARE Ratings.The acquisition had triggered talks of potential conflict and anticompetitive practice.Sebi also increased the networth criteria for CRAs from Rs 5 crore to Rs 25 crore
The regulator also asked CRAs to segregate their activities other than rating financial instruments into a separate legal entity to focus on core business.Meanwhile, the Sebi board deferred a decision on bank default disclosure norms.“There was a detailed discussion on the subject.
It is a good concept, but there are some implementation issues that need to be looked at,” said Tyagi.In August, Sebi had mandated listed entities to disclose within 24 hours any kind of bank loan default.
However, it withdrew the circular in October after the market feedback Providing relaxations to companies with high promoter shareholdings, Sebi allowed two new routes for dilution.The regulator said companies could dilute up to 2 per cent by way of qualified institutional placements (QIPs) and block deals.
The move will help new listed companies such as Avenue Supermarts, where promoter holding is more than the threshold limit of 75 per cent. It will also benefit the stateowned entities, which have to comply with the minimum public shareholding norms by August 2018. QIPs and block deals would offer “quick solution”, said Sebi.
Sebi also relaxed the entry norms for foreign portfolio investors (FPIs). Tyagi said the easier norms were to offset the restrictions imposed on FPIs taking the participatory note (pnote) route.
Among other measures, Sebi lowered the investment threshold for real estate investment trusts (REITs) to 50 per cent. It also allowed trading in security receipts issued by asset reconstruction companies (ARCs). Sebi said it would soon floatanew discussion paper on investment advisers, which would propose measures to separate investment advice and distribution of investment products.
The Business Standard, New Delhi, 29th December 2017

Comments

Popular posts from this blog

Shrinking footprints of foreign banks in India

Shrinking footprints of foreign banks in India Foreign banks are increasingly shrinking their presence in India and are also becoming more conservative than private and public sector counterparts. While many of them have sold some of their businesses in India as part of their global strategy, some are trying to keep their core expertise intact. Others are branching out to newer areas to continue business momentum.For example, HSBC and Barclays Bank in India have got out of the retail business, whereas corporate-focused Standard Chartered Bank is now trying to increase its focus on retail “Building a retail franchise is a huge exercise and takes a long time. You cannot afford to lose it,” said Shashank Joshi, Bank of Tokyo-Mitsubishi UFJ’s India head.According to the Reserve Bank of India (RBI) data, foreign banks’ combined loan book shrunk nearly 10 per cent from Rs 3.78 trillion in fiscal 2015-16 to Rs 3.42 trillion last financial year. The banking industry, which includes foreign banks…

RBI rushes in to prop up falling rupee

RBI rushes in to prop up falling rupee India’s central bank reportedly intervened in the currency markets on Monday to prevent a further slide in the local unit, which breached the 67 mark to a dollar for the first time in 15 months amid a widening trade gap and runaway import bills fuelled by high crude-oil prices. Some state-owned banks were seen selling dollars aggressively, interventions that market dealers attributed to the central bank’s strategy to stem the decline of the Indian rupee against the US currency. The rupee is the worst performing among a dozen Asian monetary units in the past three months. It lost 4.25 per cent to the dollar during the period, show data from Bloomberg. On Monday, the Reserve Bank of India (RBI) is said to have sold about Rs 800 million collectively on the spot and exchange traded futures markets, dealers said. An email sent to RBI remained unanswered until the publication of this report. The currency market has seen such a strong central bank interven…

GST Refund of Rs 20,000 Cr Pending: Exporters’ Body

GST Refund of Rs  20,000 Cr Pending: Exporters’ Body Refund of over Rs 20,000 crore on account of Goods and Services Tax (GST) is pending with the government with more than half the amount stuck as input tax credit, Federation of Indian Export Organisations said on Tuesday. While claims over Rs7,000 crore were cleared in March, the amount was Rs 1,000 crore in April.However, after exporters’ request, the GST council and tax department are organizing a second phase of Special Refund Fortnight starting May 31, which will enable exporters to draw their refunds at a speedy pace. Many exporters have been unable to file the refund of input tax credit due to technical glitches, exports and claim happened in different months. The major challenge lies on ITC refund especially because the process is partly electronic and partly manual which is cumbersome and add to the transaction cost, the exporters’ body said. On IGST, refunds are getting delayed due to airline and shipping companies not submitt…