From allowing options trading in commodity derivatives to mooting monitoring agencies for companies with IPO size over Rs 100 crore, the Securities and Exchange Board of India (Sebi) announced the string of decisions taken at its Board meeting on Wednesday.
The National Stock Exchange's (NSE) initial share sale will not happen soon as the bourse wants to sort out co-location issue, Sebi chairman Ajay Tyagi, told reporters after chairing his Board meeting of the regulator. Also, the appointment of NSE's CEO will also take while to be worked out, he said.
Companies raising over Rs 100 crore via share sale will have to appoint a monitoring agency to check the use of capital. The move is to ensure surveillance of any misuse of funds raised through public offers. Under the present norms, such a monitoring agency is required to be appointed only by the companies raising more than Rs 500 crore through public offers. The Board approved a proposal to fortify the monitoring of issue proceeds raised in initial public offer (IPO), follow-on public offer (FPO), as well as from existing investors through a rights issue.
"When you set up a monitoring committee, there are certain costs of compliance," he said. The new threshold has been downsized on the observation that smaller issues have been misused. "The threshold is to ensure compliance cost are okay," he said. The committee will give a report on the monitoring agency, and additionally, "audit committee will also monitor it", the Sebi chief said.
The regulatory body has also approved a proposal for inclusion of systemically important non-banking finance companies (NBFCs) registered with the RBI having a net worth of more than Rs 500 crore in the category of qualified institutional buyers (QIBs). NBFCs will now be eligible for QIB quota in IPOs, bringing them in line with banks and insurers, which will strengthen the IPO market.
The proposal to grant unified licences to brokers for trading in equities and commodities markets to deepen the market and enhance liquidity also received Sebi's nod in the meeting. The regulator will issue detailed guidelines for trading in 'option' on commodity derivatives exchanges. The Board has approved a proposal for integration of stock brokers in equity and commodity derivative space.
It's a "very big step towards further deepening the commodities derivatives market", Tyagi said.
A broker or clearing member dealing in the securities markets will be allowed to buy, sell or deal in commodity derivatives without setting up a separate entity and vice-versa. To enable the integration, Sebi will amend norms for stock broker and securities contract regulations.
With its focus whetting towards mutual funds (MFs), Sebi cleared the proposal to permit investors' purchase of MFs worth up to Rs 50,000 through digital wallets, aiming to channelise household savings into capital market and promote MFs' digitisation. However, Sebi has disallowed e-wallet issuers to offer any incentives such as cashback, directly or indirectly, for investing in MF schemes through them. E-wallet's balance has been confined merely for MF scheme subscription.
Further, a new framework for consolidation and reissuance of debt securities to deepen the corporate bond market also received the regulator's nod in its Board meet. Liquidity in the secondary market for corporate bonds will be increased via a minimal number of International Securities Identification Numbers (ISINs). An issuer will be permitted a maximum of 12 ISINs maturing per financial year.
However, these restrictions will not be applicable to debt instruments used for raising regulatory capital and affordable housing as well as capital gains tax bonds. The plan is being worked upon to minimise the number of ISINs.
STEERING CLEAR
- A broker will be allowed to buy, sell or deal in commodity derivatives without a separate entity
- Sebi has approved integration of stock brokers in equity and commodity derivatives
- Sebi has ganted single licences to brokers for trading in equities and commodities markets
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