SEBI Changes Have Significant Implication for Investors: Hemant Sood, Ludhiana
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Recently Security and Exchange Board of India (SEBI), the Indian regulatorybody for securities and commodity market, rolled out an array of significant announcements. For investors, two of them stood out as extremely relevant – easing of the delisting framework and revisioning of the criteria for futures and options(F&O)segment.
Talking on these changes, Hemant Sood, Managing Director of Findoc Investment Private Limited, a leading financial services company based in Ludhiana, shared his optimism around these announcements, terming them“positive” and “crucial” respectively and saying that “These changes are set to have significant implications for stock market investors, providing new opportunities and enhancing market liquidity.
Easing of the Delisting Framework
SEBI introduced a new delisting framework involving a fixed price process in addition to the existing reverse book building (RBB) process. Promoters now have the option to buy back shares from the public at a minimum of 15% premium to their fair price.
Additionally, the threshold for the counter-offer mechanism has been reduced from 90% to 75% of public shareholders, thus, promoters need fewer shareholders to agree to their counteroffer, making it easier to reach the necessary level of consent.
Notably, the delisting process via RBB is considered successful only if the promoter’s or acquirer’s shareholding reaches 90% post-offer.
Hemant Sood comments, "This move by SEBI is a positive step towards simplifying the delisting process, making it more attractive for promoters to take their companies private. By offering a fixed price with a guaranteed premium, SEBI ensures that public shareholders are adequately compensated. The reduction in the counter-offer threshold will also facilitate smoother delisting transactions."
Revised Criteria for F&O Segment
In another important announcement, SEBI revised the quantitative parameters for including and removing stocks in the F&O segment to ensure liquidity.
The new criteria include median-quarter sigma order size, market-wide position limit, and average daily delivery value. These criteria are expected to slightly increase the number of stocks in the F&O segment from the current 182, with approximately two dozen stocks being added or removed.
Hemant Sood explains, "The revised criteria for the F&O segment are designed to maintain the liquidity of traded stocks, which is crucial for a healthy derivatives market. By ensuring that only stocks with sufficient trading volume and activity are included, SEBI aims to prevent market manipulation and ensure a fair-trading environment. This change is expected to provide investors with more trading opportunities and better market dynamics."
Implications for Investors
These changes are set to impact investors in several ways. The eased delisting framework provides an opportunity for investors to exit at a premium when a company decides to go private, ensuring fair compensation. The revised F&O criteria will enhance liquidity and offer more trading opportunities, making the market more robust and dynamic.
Hemant Sood concludes, "Investors stand to benefit significantly from these regulatory changes. The simplified delisting framework offers clarity and fairness, while the revised F&O criteria ensure that the derivatives market remains vibrant and liquid. SEBI's proactive approach in addressing these issues reflects its commitment to protecting investor interests and promoting market integrity."
About FindocInvestment Private Limited
FindocInvestment Private Limited, based in Ludhiana, is a leading financial services company offering a range of investment solutions. With a focus on innovation and customer satisfaction, FindocInvestment provides expert financial advice and services to help clients achieve their investment goal.
Disclaimer: No Business Standard Journalist was involved in creation of this content
Topics : SEBI
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First Published: Jul 09 2024 | 1:47 PM IST
