Sebi meet: NBFCs to get QIB status; unified licence for brokers

The regulator relaxed criteria for banks in preferential allotment of shares

The Securities and Exchange Board of India (Sebi), at its board meeting on Wednesday, allowed a unified licence for brokers to operate in the equity and commodity markets, a move to bring in more harmony and similar stature for both the participants. Sebi also proposed systemically important non-banking finance companies (NBFCs) of certain worth to be categorised as qualified institutional buyers, making them eligible for participation in initial public offering with specifically earmarked allocations.

To make single licence regime effective, market regulator said it would amend rules pertaining to stock brokers and clearing member rules. The new rule might allow investors to get a common contract from the entities, which include the commodity business. Perhaps, also a common registration number for all exchanges, unlike now. 

This was the market regulator’s first board meeting under Ajay Tyagi, who took charge in March.

The objective to classify NBFCs with net worth more than Rs 500 crore as institutional buyers would widen domestic investor base and reduce dependence on foreign investors. This also bring them at par with mutual funds and insurance companies. 

Sebi has also granted leeway for banks by relaxing lock-in period and eligibility criteria for preferential share allotements. Sebi has proposed to exempt scheduled banks and financial institution like NBFCs under the issue of capital and disclosure requirements rules.

The regulator has also introduced common registration form for foreign portfolio investors for their easier entry and have also clarified on investments by NRIs (non-resident Indians) through P-notes (participatory notes). Earlier there were no rules for it and were based on frequently asked questions. 

Besides, the regulator also asked investment bankers to extend post-issue monitoring requirement for IPOs of less than RS 500 crore. It said that this would curb misuse of IPO funds for siphoning of IPO proceeds.

Sebi has also issued draft notification that seeks to allow option trading in commodity bourses. To boost mutual fund industry, it has also allowed instant access facility and proposed e-wallet for deploying money in MFs. 

Sebi’s big bang announcements

* NBFCs classified as institutional buyers

* Unified licence for brokers in commodity and equity segments

* Amendment in SECC rules to enable commodity exchanges to deal in options

* Relaxes criteria for banks in preferential allotment of shares

* Clarity on NRI investments and simpler registration for foreign investors

* Extends post-issue monitoring requirement for IPOs of less than Rs 500 crore