Market regulator Sebi issues guidelines on settlement penalties

Under the norms, entities can settle a matter by paying an amount, usually decided by a committee of Sebi

The Securities and Exchange Board of India (Sebi) has introduced a settlement calculator to bring transparency in the amount to be paid under the Settlement Proceedings Regulations.

Entities can file for settlement in case the market regulator has passed an order or a proceeding is initiated.

Under the guidelines for the beta version of the settlement calculator, the indicative amount for first-time applicants will start from Rs 3 lakh, while the same for others is Rs 7 lakh.

A first-time applicant is a person against whom no order has been passed before.

The indicative amount for settlement will be based on per count of default, and jointly or separately as per the case.

 

Further, a ‘proceeding conversion factor’ will also be applied when calculating this amount based on the stage of the proceeding at which the settlement application is made.

However, the indicative settlement amount may be modified as deemed fit by Sebi’s whole-time member (WTM) panel, internal committee, or the high-powered advisory committee (HPAC). Further, certain non-monetary settlement terms may also be levied.

“In case of more than one proceeding arising from the same cause of action has been initiated against the applicant, the indicative amount shall be increased by 20 per cent,” as per the guidelines.

In situations where the formulae for calculating the amount are inapplicable or cannot be adopted due to any peculiarity in the default, the internal committee, HPAC, or WTMs may decide the settlement amount.

Not all settlement applications are approved by the regulator. These applications can be rejected if the inspection or audit is not yet completed or if the amount due under the order is liable for recovery under the securities laws.

Individuals and entities can file an application within two months from the show-cause notice.

Guidelines on IPF for commodity derivatives
 
The Securities and Exchange Board of India (Sebi) has issued guidelines on investor protection fund (IPF) for commodity derivatives exchanges. As per the update, the exchanges will have to contribute 1 per cent of the turnover fee charged by them from the trading members (brokers) or Rs 10 lakh to IPF, whichever is higher in the financial year. Further, all penalties levied and collected by the stock exchange will also be contributed towards the IPF. Industry experts said that these stock exchanges, including NSE and BSE, were exempted from these contributions for the commodity derivatives segment in the initial phase to build robustness.