Sebi brings in reforms to woo investors, sets stricter rules

Unveiling a raft of reform measures, Sebi today approved options in commodity derivatives, unified licence for brokers, mutual fund investments through digital wallets, stricter public offer norms and enhanced safeguards to curb illicit fund flows.
The first board meeting of regulator Sebi under the chairmanship of Ajay Tyagi also decided to relax preferential allotment norms for scheduled banks and put in place a new framework to deepen the corporate bond market.
These measures are expected to provide a fillip to the domestic markets, which has seen robust trends in recent weeks.
The agenda-heavy meeting held here saw the watchdog giving its green light to the long-awaited move of permitting options trading in commodity derivatives.

Announcing the decision aimed at enhancing liquidity, Tyagi said it will be implemented "quickly" as commodity derivatives market is a high priority area.
However, he indicated that it might take some more time before institutional investors, including banks, are permitted in commodities market.

As it works to bring more synergy between different market segments, the watchdog has decided to put in place a unified licence for brokers and clearing members to operate in commodity derivative as well as equity markets.
In a major investor-friendly move along with promoting digitisation, mutual fund investments up to Rs 50,000 can be made through electronic or digital wallets.

Furthermore, mutual funds and asset management companies can provide instant online access facility to resident individual investors in liquid schemes.
The decisions are part of larger initiatives to channelise household savings into the capital market as well as promote digital payments in the mutual funds industry.
To safeguard investor interests, entities coming out with public offers, including initial share sales, will be required to appoint a monitoring agency to keep tabs on the utilisation of the proceeds in case the offer size is more than Rs 100 crore.
Continuing with its efforts to check black money flow into the securities market, the watchdog has tightened the norms pertaining to participatory notes (P-Notes) -- a popular instrument for foreign investors which in some quarters is perceived as a route to channel illicit money.

Providing legal sanctity, Sebi regulations will spell out that resident as well as non-resident Indians are barred from making investments through P-Notes.
Against the backdrop of the banking sector battling bad loan woes, Sebi has decided to relax the preferential share allotment regulations for scheduled banks and financial institutions in an effort to help them recover dues amid rising bad loan woes.
Among others, a new framework for consolidation and re- issuance of debt securities as part of efforts to deepen the corporate bond market has been approved by the Sebi board.
Liquidity in the secondary market for corporate bonds will be increased by way of minimal number of ISINs International Securities Identification Numbers). ISINs are used to number specific securities.

Furthermore, major non-banking finance companies (NBFCs) will be eligible for quota reserved for qualified institutional buyers in IPOs, bringing them at par with banks and insurers.