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At a conference organised by the Federation of Indian Chambers of Commerce and Industry (Ficci) on Wednesday, Sebi Chairman U K Sinha said work on new delisting regulations was at an advanced stage, adding the rules might be announced next month.
Those in the know say the announcements are likely at Sebi’s board meeting scheduled for November 10.
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Earlier this year, the regulator had issued a discussion paper, proposing to revamp the formula for price discovery for delisting through the reverse book-building method. The current framework is considered heavily skewed in favour of minority shareholders and, therefore, promoters say taking a company private is extremely difficult. Sinha said companies should be able to delist in an honourable and fair manner, keeping in mind the interests of investors.
The market regulator also plans to replace the two decade-old insider trading regulations, based on the recommendations of a panel headed by N K Sodhi, former chief justice of the Karnataka and Kerala high courts. The panel had proposed expanding the ambit of and disclosure requirements related to insider trading regulations. “The new insider trading regulations will be more stringent. They will also remove the anomalies persisting now,” Rajeev Kumar Agarwal, Sebi’s whole-time member, said on the sidelines of the Ficci conference.
Sebi had made the Sodhi panel’s report public in December 2013 for feedback on the issue.
The Sebi board might also approve proposed listing agreement regulations, likely to lead to better corporate governance. These will replace the stock exchange listing agreement, a rule book followed by listed companies. “The listing agreement already has legal status and is fully enforceable. The clear regulations will grant more sanctity to listing requirements and give them more flexibility,” said Sandeep Parekh, founder, Finsec Law Advisors.
The regulator is also working on reducing the time between selling securities through public issues and listing or trading on stock exchanges. It also plans to tweak the institutional trading platform, as well as the mechanism for the settlement of government bonds. Sinha said Sebi was working to reduce the timeframe for initial public offerings (IPOs) to three-five days, through the use of the electronic IPO (or e-IPO) process. Currently, there is a gap of 12 working days between IPO closing and listing.
The e-IPO process allows for paperless applications, which could significantly reduce the processing time for the issue. Sinha said this might be implemented this financial year. “We are examining it seriously and might come out with something soon,” he added.
It has also been suggested the settlement cycle for government bonds be changed from the T+1 model (trading day plus a day) to T+2. The government, Sebi and the Reserve Bank of India were working on the issue, Sinha said.
He expressed confidence foreign flows would remain robust. “I wouldn’t be surprised if FII (foreign institutional investor) flows this year are at an all-time high,” he said. So far this year, FII have net-bought about $14 billion.
