The Securities and Exchange Board of India (Sebi) on Thursday said starting October exchanges will be allowed to deal in both equities and commodities. The move will benefit the National Stock Exchange (NSE), BSE and Multi Commodity Exchange (MCX) who currently deal with either equities or commodities. The concept of universal exchanges was in the works since commodities regulator body Forward Markets Commission (FMC) was merged with Sebi in 2015. Earlier this year, Sebi allowed single intermediaries, such as brokers, to deal with both commodities and equities under a single license. Sebi said the steps needed for allowing universal license are being put in place and the amended Stock Exchange and Clearing Corporation (SECC) regulations would become effective from October 1.
Exchanges welcome Sebi’s decision stating they would venture into new segments. BSE, which currently offers trading in equities and currency derivatives, said it has “geared up itself for long” to provide new facilities. Shares of BSE gained 3%, while MCX declined 1% on Thursday, even though Sebi’s announcement came after market hours. Market players said the move will increase competition in the commodities trading space with the foray of stronger players such as NSE and BSE.
Addressing the media after the board meeting, Sebi chairman Ajay Tyagi said the regulator’s approval will be needed prior to launching trading in new segments.
Meanwhile, the Sebi board approved shareholding and governance norms for credit rating agencies (CRAs) and mutual funds (MFs)
The regulator has put a 10% cap on cross-shareholding and also curbs on board positions for both MFs and CRAs. In case of MFs, a sponsor would be allowed to hold above 10% 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 hold 18.5% stake in UTI MF and also own their MF subsidiaries. In the past, UTI MF has struggled to address its shareholding issue as each of the stakeholders being adamant on the dilution.
Tyagi said MFs will get one year to bring down their shareholding after Sebi notifies the new norms.
Experts said the shareholding cap in case of both CRAs and MFs is to avoid conflict of interest situations. In June, Crisil had bought 8.8% stake in rival Care Ratings. The acquisition had triggered talks of potential conflict and anti-competitive practice.
Sebi also increased the net worth criteria for CRAs from Rs 5 crore to Rs 25 crore. The regulator has 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 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,” Tyagi said.
In August, Sebi had mandated listed entities to disclose within 24 hours any kind of bank loan default.
Providing relaxations to companies with high promoter shareholdings, Sebi allowed two new routes for dilution. The regulator said companies can dilute up to two% by way of qualified institutional placements (QIPs) and block deals. The move will help new listed companies such as Avenue Supermarts, where promoter holding currently is more than the threshold limit of 75%. It will also benefit the state-owned entities which have to comply with the minimum public shareholding norms by August 2018. QIPs and block deals will 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 (p-note) route.
Among other measures Sebi lowered the investment threshold for real estate investment trusts (REITs) ease to 50%. It also allowed trading in security receipts issued by asset reconstruction companies (ARCs). Sebi said it would soon float a new discussion paper on investment advisers which will propose measures to separate investment advice and distribution of investment products.
On the earnings leak matter, Tyagi said avoiding misuse of price-sensitive information is a critical issue that Sebi is dealing. Commenting on the order against Axis Bank, the Sebi chief said the regulator is conducting a separate inquiry into the leaks. Tyagi said there are more companies under investigation.
Vikram Limaye, managing director and chief executive officer, NSE said: “NSE will certainly get into commodities if the market regulator Sebi approves exchanges to get into all asset classes including equities and commodities.”
Exchanges welcome Sebi’s decision stating they would venture into new segments. BSE, which currently offers trading in equities and currency derivatives, said it has “geared up itself for long” to provide new facilities. Shares of BSE gained 3%, while MCX declined 1% on Thursday, even though Sebi’s announcement came after market hours. Market players said the move will increase competition in the commodities trading space with the foray of stronger players such as NSE and BSE.
Addressing the media after the board meeting, Sebi chairman Ajay Tyagi said the regulator’s approval will be needed prior to launching trading in new segments.
Meanwhile, the Sebi board approved shareholding and governance norms for credit rating agencies (CRAs) and mutual funds (MFs)
The regulator has put a 10% cap on cross-shareholding and also curbs on board positions for both MFs and CRAs. In case of MFs, a sponsor would be allowed to hold above 10% 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 hold 18.5% stake in UTI MF and also own their MF subsidiaries. In the past, UTI MF has struggled to address its shareholding issue as each of the stakeholders being adamant on the dilution.
Tyagi said MFs will get one year to bring down their shareholding after Sebi notifies the new norms.
Experts said the shareholding cap in case of both CRAs and MFs is to avoid conflict of interest situations. In June, Crisil had bought 8.8% stake in rival Care Ratings. The acquisition had triggered talks of potential conflict and anti-competitive practice.
Sebi also increased the net worth criteria for CRAs from Rs 5 crore to Rs 25 crore. The regulator has 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 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,” Tyagi said.
In August, Sebi had mandated listed entities to disclose within 24 hours any kind of bank loan default.
Providing relaxations to companies with high promoter shareholdings, Sebi allowed two new routes for dilution. The regulator said companies can dilute up to two% by way of qualified institutional placements (QIPs) and block deals. The move will help new listed companies such as Avenue Supermarts, where promoter holding currently is more than the threshold limit of 75%. It will also benefit the state-owned entities which have to comply with the minimum public shareholding norms by August 2018. QIPs and block deals will 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 (p-note) route.
Among other measures Sebi lowered the investment threshold for real estate investment trusts (REITs) ease to 50%. It also allowed trading in security receipts issued by asset reconstruction companies (ARCs). Sebi said it would soon float a new discussion paper on investment advisers which will propose measures to separate investment advice and distribution of investment products.
On the earnings leak matter, Tyagi said avoiding misuse of price-sensitive information is a critical issue that Sebi is dealing. Commenting on the order against Axis Bank, the Sebi chief said the regulator is conducting a separate inquiry into the leaks. Tyagi said there are more companies under investigation.
Vikram Limaye, managing director and chief executive officer, NSE said: “NSE will certainly get into commodities if the market regulator Sebi approves exchanges to get into all asset classes including equities and commodities.”
No comments:
Post a Comment