SEBI, at its board meeting on Monday, is expected to decide on a number of crucial issues, including those related to listing of stock exchanges, regulating algorithmic trading and incentivising green bonds. The regulator is also expected to discuss easier norms for trading in corporate bonds.
Other issues which are likely to be discussed include increase in limit of foreign portfolio investment in stocks from the existing 10 per cent, allowing retail investors to dial into earnings calls of companies, making business responsibility reporting mandatory for top 500 companies, exempting open offers triggered due to passive incidents such as increase in the voting rights of a shareholder due to the expiry of call notice period.
UK Sinha, Chairman, SEBI, recently said that fresh guidelines for listing of stock exchanges would be out soon with the respective sub-committees submitting their findings. “There are some impediments with respect to the listing norms but we are hoping to resolve them very soon,” he said.
According to SEBI’s Stock Exchange and Clearing Corporation Regulations (SECC) of 2012, exchanges cannot list on their own platform and every investor in an exchange should be a fit and proper person.
In addition, there is a cap of five per cent for investors which are overseas exchanges besides stringent norms for appointment of directors on exchanges.
As many as 17 foreign investors including Acacia Partners, Goldman Sachs, GTI Capital, Morgan Stanley, Norwest Venture Partners, SAIF Partners, Singapore Exchange Ltd and Temasek have written to the Finance Minister seeking to enhance individual investment limits, opening up investments by regulated funds besides improving the process for introducing new products.
Also trading The SEBI board will also be deliberating on the number of options available to regulate high frequency and algorithmic trading.
SEBI is contemplating installation of a two-queue system – which allows orders by brokers with a co-location advantage (proximity to an exchange server) and another without, to go into the system sequentially.
The other option is to have a lock-in period for high frequency trade. Both options seek to reduce trading speed. The securities regulator is also looking at incentivising companies which issue green bonds. In the absence of any regulation, a number of companies have issued green bonds in foreign markets. There could also be efforts to make the bond market attractive by allowing issuers to list on the stock exchange for secondary market transactions.
The other issues on the agenda include tightening mutual fund guidelines to prevent excessive exposure to one particular sector or companybesides framing norms on sale of schemes through e-commerce portals and rationalising distributor commissions, conflict of interest of debenture trustees and issues related to credit ratings when companies do not share information and inter-operability of clearing corporations.