Some highlights from the SEBI board meeting held on 28th June.
Restrictions on SEBI registered entities on their association with Finfluencers
To prevent inappropriate claims and actions in securities dealings, SEBI has approved rules prohibiting regulated individuals and their agents from associating with those making investment claims, unless permitted. Exceptions include engagement with entities solely focused on investor education and using approved digital platforms with SEBI-monitored controls. Regulated parties must ensure their associates comply with these guidelines.
Enhancing Voluntary Delisting Flexibility: Revision of SEBI (Delisting of Equity Shares) Regulations, 2021
In a move to streamline business operations, safeguard investor interests, and enhance flexibility within the Voluntary Delisting framework, SEBI’s Board has sanctioned the following revisions:
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Implementation of a Fixed Price mechanism as a viable option to the Reverse Book Building process (RBB) for companies with actively traded shares. The fixed price proposed by an acquirer must offer a minimum of a 15% premium over the floor price stipulated in the Delisting Regulations.
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Introduction of an alternative delisting structure for publicly listed Investment Holding Companies (IHC) through a scheme of arrangement involving selective capital reduction.
Simplifying Business Operations for FPIs through Enhanced Disclosure Framework
The board has endorsed a proposal to relieve University Funds and University-related Endowments, registered or eligible for Category I FPI status, from additional disclosure obligations outlined in SEBI’s circular dated August 24, 2023, under the following conditions:
- The Indian equity assets under management (AUM) are below 25% of the Global AUM.
- The global AUM exceeds the equivalent of INR 10,000 crore.
- The entity has submitted appropriate returns to tax authorities in its home jurisdiction, confirming its nonprofit status and tax exemption.
Enhanced Flexibility in SEBI Regulations for Simplifying Debt Securities and NCRPS Public Issuance Process
- Unified procedure for applying in public issues of debt securities and NCRPS, requiring UPI for individual investments up to Rs 5 lakhs.
- The listing timeline is reduced to T+3 working days from T+6.
- The minimum subscription period is cut to 2 working days from 3.
The public comments period for draft offer documents is shortened to 1 day for listed securities and 5 days for others.
Review of eligibility criteria for entry/exit of stocks in the derivatives segment
In a bid to uphold a thriving securities market with robust regulation and safeguarded investors, the Board has approved updated eligibility criteria for stocks entering and exiting the derivatives segment. The revised standards, aligned with market changes since 2018, now mandate a 6-month period for stocks to qualify for exit post-entry. For current derivative stocks, performance-based exit criteria will apply 3 months after the circular’s issuance. Moreover, a Product Success Framework has been introduced for single stock futures and options, ensuring market liquidity and participation support market growth, regulation, and investor safety, effective 6 months after the circular release.
Details of the revised framework:
| Evaluation metric | Revised criteria |
|---|---|
| Average Daily Market Capitalization and Average Daily Traded value (ADTV) in the previous six months on a rolling basis | Amongst top 500 stocks |
| The stock’s Median Quarter Sigma Order Size (MQSOS) over the last six months,on a rolling basis, shall not be less than: | INR 75 Lakh |
| The stock’s market wide position limit (MWPL) on a rolling basis shall not be less than | INR 1,500 crore |
| The stock’s Average daily delivery value (ADDV) in the cash market, in the previous six months on a rolling basis,shall not be less than | INR 35 crore |
To assess a stock’s exit from the derivatives segment under the Product Success Framework, the following conditions must be met:
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At least 15% of active trading members in all stock derivatives or 200 trading members (whichever is lower) must have traded in the stock’s derivative contract on average each month during the review period.
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Trading must occur on a minimum of 75% of trading days during the review period in the derivatives segment.
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The average daily turnover (futures + options premium) should be at least INR 75 crore during the review period.
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The average daily notional open interest (futures + options notional) of the specific stock should be at least INR 500 crore during the review period.
Some of the other SEBI board decisions include:
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Cybersecurity and Cyber Resilience Framework (CSCRF) for SEBI Regulated Entities (REs)
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Parameters for independent external evaluation of performance of Market Infrastructure Institutions
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Proposal to facilitate an optional mechanism for fee collection by SEBI registered Investment Advisers (IAs) and Research Analysts (RAs)
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Proposal to remove Financial Disincentive applicable to Managing Director and Chief Technology Officer of MIIs on account of Technical Glitch
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Guidelines for borrowing by Category I and II AIFs (facilitating ease of doing business) and specifying of maximum permissible limit for extension of tenure by Large Value Funds.
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Measures to Facilitate Ease of Doing Business for Infrastructure Investment Trusts and Real Estate Investment Trusts
You can read the full report here: