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The Securities and Exchange Board of India (Sebi) on Friday approved launch of same day settlement (T+0) for a limited set of 25 scrips with a limited number of brokers along with a slew of measures to bring flexibility for initial public offerings (IPOs), Alternative Investment Funds (AIFs), and Foreign Portfolio Investors (FPIs).
The market regulator also approved a uniform approach for verification of market rumours—based on the submissions made by an Industry Standards Forum (ISF).
Earlier, Sebi chairperson Madhabi Puri Buch had indicated March 28 as the timeline to launch T+0 settlement cycle.
“SebiI shall continue to do further stakeholder consultation, including with the users of the Beta version. The Board shall review the progress at the end of three months and six months from the date of this implementation, and decide on further course of action,” said the regulator.
Exemption to more FPIs
In the board meeting held on Friday, the market regulator also decided to give more FPIs exemption from the granular disclosures, relax the timelines for disclosure of certain material changes, and flexibility to FPIs in dealing with their securities after expiry of their registration.
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Sebi said that in case the concentrated holdings of FPIs in a listed company with no identified promoter meet certain thresholds, then they will be exempted from granular disclosures.
“The composite holdings of all such FPIs (that hold in excess of the 50 per cent concentration criteria and are not exempted) in the company with no identified promoter, is less than 3 per cent of its total equity share capital,” said Sebi specifying one of the conditions.
These exemptions come in addition to the ones given last year in the standard operating procedure where certain public retail funds and FPIs registered with specific regulators are excluded from additional disclosures.
Flexibility for IPOs
The Sebi board also gave nod to ease of doing business proposals for initial public offerings (IPOs) along with measures to curb circumvention of regulations by Alternative Investment Funds (AIFs).
The regulator has removed the requirement of 1 per cent security deposits for public issues or rights issues. It has also introduces more avenues to meet the minimum promoters’ contribution (MPC).
“Promoter group entities and non-individual shareholders holding more than five percent of the post-offer equity share capital to be permitted to contribute towards minimum promoters’ contribution (MPC) without being identified as a promoter,” said Sebi.
It has also introduced measures to make fewer instances leading to re-filing of draft documents along with flexibility in certain other compliance requirements.
Rumour verification norms for listed companies
While Sebi had extended the timeline for the implementation of rumour verification norms—under which listed companies will be required to confirm, deny or clarify market rumours—it has now approved the framework proposed by an Industry Standards Forum.
The forum had members from three industry associations. Companies would be required to do rumour verification within 24 hours of the trigger of material impact on the stock prices. Further, promoters, directors, and key managers will have to give timely response on rumours concerning them.
Norms to curb circumvention of regulations by AIFs
Amidst instances of circumvention of regulations through AIFs, Sebi approved a proposal to require AIFs, managers of AIFs, and their key personnel to carry out specific due diligence of their investors and investments.
“The specific implementation standards for verifiable due diligence to be conducted on investors and investments of AIFs shall be formulated by the pilot Industry Standards Forum for AIFs, in consultation with Sebi,” it added.
Further, the market regulator has also allowed additional flexibility to AIFs to deal with unliquidated investments of their schemes beyond expiry of tenure, along with a provision for Category I and Category II AIFs to create pledge on their holding of equity in infrastructure sector investee companies.
Sebi has also recognised the stock exchanges as a body for administration and supervision of research analysts and investment advisors.
