Coronavirus outbreak: Sebi eases compliance requirements for brokers, mutual funds

In a bid to reduce compliance burden on market participants, Sebi on Monday provided various relaxations to stock brokers and mutual fund houses, including extension in deadline for submission of financial results and disclosures on commission paid to distributors.

This is the latest in a series of measures taken by the watchdog in the wake of the coronavirus pandemic, which has also resulted in large scale sell-off in the domestic market.

Sebi also said the central government has requested states and Union Territories to keep the services of stock market entities exempted from the purview of lockdown as well as permit essential staff of the stock market participant to commute to their offices.

According to the regulator, it is closely monitoring movements in the domestic market and has been taking appropriate measures from time to time.

Also, Sebi is actively engaged with global bodies likeInternational Organization of Securities Commissions (IOSCO) and Financial Stability Board (FSB)at the global level, it said in a statement.

Among the relaxations for brokers, Sebi said penal provision for non-collection or short collection of margins by brokers which was to be implementedfrom April 1 has been deferredtill April 30.

However, reporting of such margins in cash and derivatives segments would continue to be done by the brokers.

Further, Sebi said brokers working from designated alternate locations have been exempted from the penal provisions for not maintaining call recordings of orders or instructions received from clientstill March 31, 2020.

Brokers and exchanges would have tosend a confirmation on the registered mobile number of the client immediately after execution of the order. The delay in submission of various reports by trading members would not attract penal provisions till April 30.

The regulator noted that brokers would be placed in risk reduction mode upon utilisation of 90 per cent -- instead of existing level of 85 per cent -- of the members' capital towards margins.

With regard to relaxation to mutual fund houses, Sebi saiddeadline for half-yearly disclosures of financial results have been extended by one month tillMay 31.

For existing open-ended debt-oriented mutual fund schemes that need to comply with the revised limits for sector exposure, the deadline has been extended by one month till May 1.

Besides,guidelines on valuation of money market and debt securities based on mark-to-market valuation has been extended by one month till May 1.

Further, the timeline to hold not more than 15 per cent in unlisted non- convertible debentures has been extended till April 30.

The deadline for disclosure of commission paid to distributorshas been extended by one month to May 10.

Also,the yearly disclosure of investor complaints with respect to mutual funds can be done till June30.

"The validity of Sebi's observation letter for New Fund Offer by mutual funds has been extended by six months. Thereby, mutual fundscan launch schemes within a period of one year from the date of Sebi letter," the regulator noted.

The access control presently exercised in the AMC's (Asset Management Company) dealing room including call recording of deals is temporarily relaxed subject to checks and balances including electronic confirmation by way of e-mail or other system having audit trail are in place, it added.

Over the last few weeks, the domestic stock market has been broadly moving in tandem with the other global markets owing to concerns relating to coronavirus pandemic and the resultant fear of global economic slowdown, Sebi said.

Last week, the regulator announced steps to make short-sellingof stocks difficult in order to counter the market volatility.

Earlier in the day, the regulator has relaxed provisions with regard to listed entities that have listed their non-convertible debentures, non-convertible redeemable preference shares, commercial papers and municipal debt securities.

The issuance date for debt securities has been extended by 60 days till May 31, the timeline for filing of large corporate initial and annual disclosures has been extended by June 30.

Sebi has also extended the regulatory due date for filing and compliance for Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InVITs) for the financial year ending March 31, by one month over and above the timeline in the wake of the coronavirus pandemic.

On Thursday, Sebi had allowed listed companies to defer disclosure of their fourth quarter earnings by 45 days till June 30.