CA Online

Sebi order on extending derivative trading: Key takeaways and challenges  In a move aimed at attracting investors dealing in Indian products on foreign exchanges in Singapore and Dubai, the Securities and Exchange Board of India (Sebi) on Friday allowed domestic stock exchanges to extend equity derivatives trading until 11.55 pm. The new timings will also allow a better alignment with commodity markets amid implementation of universal exchanges, which function until 11:55 pm. In this Business Standard special piece, Deven Choksey, managing director of KR Choksey Investment Managers, looks at the Sebi order and explains the key takeaways. The first good thing about that the entire development is that it brings the equity derivative market in line with the commodity derivative market. Both markets will now have similar trading hours, which will reduce systemic risk in the markets. The second aspect, the extension of trading hours will result in providing a hedging facility to po...

Why the govt is preparing a new telecom policy Why do we need a new communications policy? A lot has changed since India’s last telecom policy in 2012. The country now has the world’s second largest internet subscriber base and is seeing technological shifts in digital communications. With the advent of 5G, artificial intelligence and the Internet of Things, India needs a vision document on how to use these digital tools for the growth and development of the country and what laws need to be drafted or amended. Moreover, given the capital-intensive nature of the sector, ease of doing business needs to be improved to attract investments. What are the goals of the policy? The department of telecommunications (DoT) on 1 May floated a draft policy, with a target of attracting investments of $100 billion in digital communications. The DoT plans to send it to the cabinet in four weeks. The policy’s objectives include broadband for all, with a thrust on fibre-to-home connections, creating ...

Govt's move on fund transfer to states led to spike in bond yields ast year the Union Finance Ministry changed the dates on which it periodically transfers to states their share in central taxes. The conventional practice was to transfer funds on a monthly basis. Instead, the Centre had decided, it would from April 2018 (when the new financial year began) be transferring the states’ share in direct taxes on a quarterly basis. Transfers from Centre are a significant proportion of state revenue. So, the change created a cash management problem for states - they would have to find their own resources for spending, till the central transfer at the end of each quarter. To meet this need for additional cash every quarter, states had planned to borrow more in the first half of the financial year from markets. This surge in the supply of state paper caused a turmoil in the bond markets in early April. Yields soared, catching market observers off-guard. Perhaps realising the cascading e...

Jury is out on the impact of RBI's foreign portfolio investor measures As the short-term borrowing cost of companies spiked and foreign portfolio investors (FPIs) liquidated their bond holdings in India for greener pastures, the Reserve Bank of India (RBI) came out with various remedial measures. In the first week of April, the central bank had increased the limit of foreign investment in Indian bonds to 6 per cent of the outstanding (in two phases till 2019-20), from 5 per cent now. By the end of April, it allowed foreign investors to invest in any maturity they wished to, from the earlier restriction of investing only in papers with a residual maturity of at least three years. In corporate bonds though, the minimum residual maturity is one year, down from three years. While it did raise the cap on aggregate FPI investment in any government securities to 30 per cent, from 20 per cent earlier, the central bank also imposed a new limit that investment below one year should not...

Finance ministry gears up for second round of PSB recapitalisation he finance ministry has begun the process of ascertaining the amount of capital to be infused into public sector banks (PSBs) this financial year as a part of the second round of recapitalisation. The department of financial services has written to public sector banks seeking an update on the implementation of the reforms agenda set out by the Centre, which will become an important parameter for allocating funds to banks. “We have asked public sector banks to update us about the implementation of the 30-point reforms agenda by May 11,” said a senior finance ministry official. While announcing the broad contours of the Rs 2.11 trillion recapitalisation plan for public sector banks, the Centre had chalked out a comprehensive time-bound reforms agenda, EASE (Enhanced Access and Service Excellence). State-run banks were asked to seek approval from their respective boards for implementing the EASE plan. Based on the gove...