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In a slew of reforms, regulator Sebi on Thursday announced easier access norms for foreign investors, approved integration of stocks and commodities trading on a single exchange and capped cross-holdings in rating agencies as well as mutual funds to safeguard investors’ interest.
Sebi also issued a stern warning to insiders at listed firms against leakage of key financial details and said it is probing a number of companies and other entities and no one, including auditors, would be spared for such wrongdoings and the insider trading norms would be strengthened if required. Besides, the Securities and Exchange Board of India (Sebi) allowed listing and trading of security receipts issued by ARCs (Asset Reconstruction Companies) to enhance capital flows and help deal with bad loans in banking industry, even as it deferred a decision on making it mandatory for listed firms to immediately inform investors about any loan defaults. Sebi also relaxed its regulations for real estate and infra investment trusts, besides providing more avenues for listed firms to meet minimum 25 per cent public shareholding.
Sebi also said it will float a new consultation paper for changes in rules for investment advisors, requiring clear segregation between two activities of an entity — that is providing investment advise and distribution of products.
Announcing the decisions discussed and approved by its board here on Thursday, Sebi Chairman Ajay Tyagi said further discussions are needed on the loan default disclosure norms, which were originally to come in force in October but had to be deferred amid reservations on some clauses from banks and from some other quarters. On another long-awaited proposal for overhaul of corporate governance norms as per suggestions of a panel headed by eminent banker Uday Kotak, Tyagi said it would be taken up at the next board meeting as the regulator does not want to take a decision in a hurry. The decision to allow all exchanges trading facility in stocks as well as commodities was welcomed by the market participants, even as those from the banking industry and the companies in financial distress heaved a sigh of relief from deferment of decision on immediate loan default disclosure.
Without divulging what transpired in the board meeting, where a revised proposal was presented with some relaxations on disclosure about certain kinds of loans, Tyagi said, “There was discussion on this subject.” “In August 2017 when we issued it (the first proposal), it was on our own volition. No one really asked us to issue it. This issue was discussed at length but it requires further discussion so it has been deferred by the board,” he said. On convergence of stock and commodity exchanges, Tyagi said all bourses will be able to provide trading in all permitted products from October 1, 2018 — three years after the merger of erstwhile commodities regulator FMC with Sebi.
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