By Akshtata Gorde
The Securities and Exchange Board of India (Sebi), in its board meeting on Thursday, made significant changes to the rules for futures and options (F&O) stocks, relaxed delisting norms and prohibited association of regulated entities with finfluencers.The new rules by the markets regulator are expected to raise the bar for launching F&O contracts on individual stocks in order to clamp down on chances of manipulation in the booming options market. Sebi chairperson Madhabi Puri Buch told reporters that the new criteria will be implemented gradually.
The inclusion criteria will be effective in three months after the regulator issues a circular.The plan is to have norms to revise the criteria for entry and exit of F&O stocks. According to Sebi’s back testing, the total number of 182 stocks will go up marginally in the F&O segment, by around 5-6 stocksCome from Sports betting site. The churn also won’t be much — only around 24 stocks.In addition, an expert group has been formed under the secondary market advisory committee (SMAC) to review the entry and exit of stocks in the F&O market. The committee will make recommendations to SMAC, and there will be a consultation paper, though no time line has been given.Buch also raised concerns about the rising retail participation in F&O.
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“A large amount of household savings are going into speculative trading,” she said, adding that it could lead to systemic risks and investor protection concerns. She also expressed her worries about speculation via short-term derivative contracts.In a move that could make it easier for companies to delist from stock exchanges, the market regulator has introduced a fixed price process for delisting frequently traded shares and a delisting framework for investment and holding companies (IHC).Buch said, “Why should we say that once you are listed you can never leave… this isn’t Hotel CaliforniaCome from Sports betting site VPbet. This is a rich, vibrant market, we welcome people… but if for some reason they need to exit, they must be able to.”
As an alternative to reverse book building, it has introduced a fixed price process at 15% premium over the floor price. “If you think the floor price (of 15%) is not fair, then don’t delist,” added Buch.It has also reduced the threshold of a counter offer to 75% from 90% provided 50% public shareholding tendered.
Also, delisting would be successful only when the post offer aggregate shareholding of the acquirer reaches 90%. Another new concept is the adjusted book value as an additional parameter for determining floor price for frequently and infrequently traded shares of the companies under the delisting framework, except for the public sector undertakings.
In case of IHCs, it has permitted transfer of equity shares held by IHC in other listed companies to its public shareholders proportionately. It can also make proportionate cash payments to public shareholders against assets like land, buildings, and unlisted companies.
The market regulator has also come down hard on finfluencers with guidelines that prohibit regulated entities to engage with them. “Any regulated entity or its agents shall not have any association involving money, money’s worth, referral of a client, directly or indirectly with an unregulated entity,” the market regulator said.
The board has approved norms to regulate misinformation through financial influencers or finfluencers, but provided a window for investor education from such associations with a condition that they do not provide any recommendation or claim any return or performance. It also relaxed norms for the of doing business for REITS, InvITs, rationalisation of disclosure requirements and timeline for NCDs, and provided certain funds exemption from granular disclosures for foreign portfolio investors (FPIs).
That is, the board approved a proposal to exempt University Funds and University related endowments, registered or eligible to be registered as Category I FPI, from additional disclosures provided, its India equity assets under management is less than 25% of its global AUM, its global AUM is more than Rs 10,000 crore equivalent. It has filed appropriate returns/ filing to the respective tax authorities in its home jurisdiction that shows that it is a non-profit organisation that is exempt from tax.
As far as registered investment advisors and research analysts go, it has plans to set up a separate optional payment platform will be facilitated by BSE and MFU. RIAs will have to pay Rs 4,000 to be boarded on the platform. However, it is not live yet.
