SEBI & Share Market

Besides, the Securities and Exchange Board of India (Sebi), in its meeting here decided that institutional investors will have to pay upfront 100 per cent money in primary issues like retail investors.

Briefing newsmen about the board meeting, Sebi chairman C B Bhave said, it has been decided to establish a mechanism for physical delivery of shares in the derivative segment and it will also work on raising the time period of derivatives contract from three years to five.

The decision to extend the scope of employees quota, Bhave said, will apply to employees of those companies whose accounts are consolidated with the issuing entity.

The decision would be applicable from the date of notification and not with the retrospective effect, he said.

At present, employees are entitled for allotment of shares up to 10 per cent of the issue size.

As regards the decision on Qualified Institutional Buyers (QIBs) for payment of 100 per cent money upfront in public issues, the regulator said that "the decision will bring parity between retail and QIBs...This will apply from May 1, 2010."

"The Sebi Board has decided to allow physical delivery in the derivatives segment. There has been a demand for this for some time now and the Board felt that there was some substance in this," Sebi Chairman, C B Bhave, told reporters here today.

Sebi will discuss with the stock-exchanges and institute an appropriate mechanism for physical delivery in derivatives market, he said.

"This issue would now be discussed with the stock-exchanges and an appropriate mechanism for physical delivery in derivatives would be evolved," Bhave said.

"There will be a need for proper risk-containment systems," he added.

Source: Economic Times SEBI allows physical delivery in derivatives segment

The Securities and Exchange Board of India (Sebi) on Saturday saidinstitutional investors have to pay 100 per cent of the value of

shares in all new share sales at the time of application from May 1,2010, bringing them on par with retail investors. At present, the

Qualified Institutional Buyers (QIBs) are required to pay only 10 per cent of the value of the shares at the time of application.

In another significant move, the regulator has also decided to allow physical delivery of shares in equity derivatives, but the date of its implementation will be decided only after consultation with stock exchanges. Sebi has also decided to allow 5-year contracts in derivatives segment, besides introducing new derivative contract basedon the volatility index.

The Board also decided that the reservation for employees in

public/rights issues would be available to employees of subsidiaries and material associates of the issuer whose financial statements are consolidated with the issuer's financial statements.

Source: Mydigitalfc.com Sebi Asks QIBs To Put 100 % Bid Amount During Public Issues

The market regulator has advised investors to deal with registered intermediaries and not get carried away by those promising unrealistic gains. The warning comes in the wake of a large number of advertisements promising investors windfall gains only on the basis of “tips”.

Most of these entities promise guaranteed gains in excess of 500 per cent, apart from daily intra-day tips and also derivative strategies. Industry players said the number of unsolicited SMS have also registered a rise especially when markets have been on a downslide. In a release issued on Wednesday, Sebi said it has observed a proliferation of websites that offer investment advice to investors.

“Investors should realise that when they follow such advice they are exposing themselves to undue risk in using unconfirmed information,” the release said.

"The role of market infrastructure institutions has been continuously evolving to meet the challenges of the emerging securities market. Accordingly, a committee has now been constituted under the chairmanship of Bimal Jalan," SEBI said in a release here today.

The committee may also look into the listing-related matters of the stock exchanges.

Commenting on the move, Prime Database managing director Prithvi Haldea said, "the committee has been set up to look into the ways to avoid conflict of interest between profit functions and regulatory functions of the stock exchanges. It could also look at the listing related matters of these exchanges." The SEBI said these institutions are increasingly called upon to undertake regulatory functions, including supervision of the markets, while simultaneously pursuing commercial objectives.

Delivering his address at the Assocham Mutual Fund Summit on Wednesday, Mr K.N. Vaidyanathan, Executive Director, SEBI, said the distributors of MF units and other such agents should stop complaining and stay focused to enable retail investors have maximum return on their investments and stop thinking in terms of their commission.

This is necessary because with reasonable commission, the distributors and agents will be able to generate volumes of scale to enable them to earn money, which they cannot envisage in the initial phases, he said.

Securities lending is primarily used by short-sellers who borrow stocks from other investors to meet their obligations to the clearing house.
Large institutional investors such as foreign institutional investors and mutual funds who hold shares for the long term have traditionally been lenders in the market.

The new norms will also allow a lender or a borrower to close his position before the agreed-upon expiry date. The absence of such flexibility has been an obstacle to the wider use of securities lending and borrowing, or SLB.

Sebi introduced the SLB platform in April 2008 to enhance liquidity in the derivatives market, and help better price discovery in underlying shares.

Short sales means selling securities one does not own. The trade is settled in a clearing house by borrowing shares from other investors for a fee, on the condition that they will be returned to the lender on a specified date.

N. Sundaresha Subramanian contributed to this story.

Source: Live Mint SEBI NORMS :Now Equity Investors Can Lend And Borrow Shares For 12 Months

As of now, an open offer for a minimum of 20 per cent in the target company is required to be made by any entity that has purchased 15 per cent equity, either from the promoters or the open market.

Sebi has set up a Takeover Regulatory Advisory Committee, with former Securities Appellate Tribunal ( SAT) presiding officer C. Achuthan as chairman, which is looking into suitable changes in the existing takeover regulations.

While any changes are expected to take effect from the next fiscal only, the committee is said to be seriously looking at increasing the open offer size from 20 per cent to as high as 100 per cent, while it might also increase the open offer trigger limit from 15 per cent.

But critics say investor power could also create unfair deals for distributors.

The market regulator's direction to asset management companies (AMCs) not to ask investors for no-objection certificates (NoCs) from distributors when they want to switch to another distributor or trade directly, has far reaching consequences than what catches the eye.

Market players said that while the move makes customer the real king, it also poses new challenges to be addressed and new opportunities.

"It is a welcome move from investor point of view. Investors were concerned because no distributor would be giving the NoC or their consent for investors to go to another distributor," said Rajesh Krishnamoorthy, managing director, iFast.

Source: Hindustan Times SEBI frees investors from distributor power

"It has been decided that the limitation period of six months be computed from the end of the quarter in which the disputed transaction was executed," said Sebi.

Earlier, if the disputed transaction happened on October 1, an investor could have filed for arbitration only till March 31. But now, an investor will have time till June 30 to file the case.

The market regulator took this decision on the recommendation of its secondary market advisory committee.

In addition to this, Sebi said the period could be extended by another three months by the stock exchanges in case the application was delayed for reasons beyond the control of the investor. In such cases, "rejection of the same is not in the interest of investors," it said.

Source: Business-standard Sebi gives investors more time to file arbitration applications

Despite equity markets gaining almost 80 per cent so far in the current year, the number of new foreign institutional investors (FIIs) coming to India has touched a six-year low.

The number of new FIIs registered with the Securities and Exchange Board of India (Sebi) has declined 70 per cent in the current calendar year. Only 111 new FIIs got registered with Sebi till November, against as many as 375 in calendar year 2008 and 226 in 2007. The total number of FIIs with offices in India was 1,705 till November.

Sebi has simplified the procedure for FII registration and reduced fees significantly, but larger market realities affected these institutions' decision to enter India and register here.

Siddharth Shah, head of fund practices, Nishith Desai Associates, said, "Following last year's global financial crisis, most FIIs have been facing redemption pressures from investors and that has resulted in shrinking of the global pool. Hedge funds, considered the most active and keen players in the Indian markets till 2008, were worst affected during the financial turmoil, resulting in several of them liquidating or significantly curtailing their international exposure to emerging markets like India."

Also, the number of new FII sub-accounts entering India declined over 60 per cent, with 475 new ones registering themselves with Sebi in 2009 as compared to 1,228 in 2008. The number of sub-accounts registered with Sebi was 5,347 as of November.

Source: Business-standard FII Registrations Fall 70%

Capital market regulator Securities and Exchange Board of India (Sebi) on Thursday eased norms for security, or the asset cover, required for issuing secured bonds. Sebi said that issuers will have to maintain a 100% asset cover that is sufficient to discharge the principal amount at all times for their debt securities offerings.

In May, Sebi had decided that companies raising money through ‘secured’ bonds and debentures should ensure that the papers issued are fully backed by assets on which a charge has been created up to 100%. Some issuers, such as housing finance companies and other companies, which normally issue partly secured debt securities faced problems in raising funds, as companies usually sold debentures with an underlying security that was only worth a fraction of the amount raised. The charge was created on a portion of assets and the rest was secured by way of negative lien. But the new rule specifies only asset cover.

According to industry players, subsequent to the new rule, issuers will be able to issue bonds that are either unsecured, partly or fully secured. Sebi has also enhanced disclosures to investors by issuers. “The periodic disclosures to the stock exchanges will now require disclosure of the extent and nature of security created and maintained,” the regulator said.

Compared to the half-yearly certification on security cover for listed secured debt securities, the amended listing agreement provides for “submission of such certificates regarding maintenance of 100% asset cover, and the time limit of submission in respect of the last half year has been aligned with the option provided for submission of annual audited results at a later date.

Source: Economic Times Sebi eases norms for raising funds from bond market

Calling the gestation period an unacceptable risk that investors and issuers carry, Bhave said that SEBI plans to reduce this period to seven days over the next one year. "Shorter gestation period would unlock money invested in IPOs faster, so that it can be productively employed," he said.

Regulator said that the primary issuance process in India is not as efficient as the secondary market and that timely settlement of transactions continue to be a challenge in the system. Seeking to lower costs and risks associated with mutual fund investments, which in turn affect investors, Bhave said, "We need to look at reducing the cost of mutual funds and risk of investors." He suggested the industry to set up a common transaction platform.

A common platform is being designed by Association of Mutual Funds in India (AMFI) and is likely to be operational by March 2010. The idea is to provide all fund houses and distributors a single platform where investors can have the true sense of choice and a mutual fund investor can access this common platform and choose the scheme that he wants to invest in.

Source: Hindustan Times SEBI wants listing within 7 days of IPO

The next set of reforms in the mutual funds industry is round the corner with the Securities and Exchange Board of India (Sebi) likely to lower the fund management charges and introduce stricter compliance standards.

The mutual funds advisory committee, which met on Friday, has recommended that asset management companies lower the fund management fee from the present level. Fund houses currently charge 1.25 per cent as asset management charges for the first Rs 100 crore garnered by a scheme, and 1 per cent thereafter. The advisory committee, comprising industry representatives and investor bodies, has suggested that the fee should be lowered as the assets under management increase.

The recommendation comes just as the dust was settling over the ban on entry load and the revamp of the exit load structure. The ban on entry load from August has led to complaints from fund houses that can no longer pass on distribution costs to investors.

Friday’s meeting was also attended by Sebi representatives, including Chairman C B Bhave.

In addition, Sebi is looking at the role of mutual funds in maintaining high corporate governance standards in listed companies. The regulator is of the view that mutual funds are not utilising their rights in companies in which they invest. Fund houses have been asked to question a company’s governance at annual general meetings, take recourse to legal provisions by approaching the Company Law Board or the registrar of companies if they felt that the company was not acting in the interest of investors, sources present at Friday’s meeting told Business Standard.

Source: Business-standard Sebi plans fresh round of mutual fund reforms