SEBI board to discuss stricter framework for fiduciaries in securities market

SEBI board is likely to discuss tomorrow a stricter framework for fiduciaries in the securities market, including auditors and valuers, along with a proposal requiring large firms to raise at least 25 per cent through corporate bonds from next fiscal.

According to officials, a proposal to allow trading in commodity derivatives segment by foreign entities, with exposure to the Indian physical commodity market, and the issue of introducing a common application form for FPIs to enter into the domestic market are also on the agenda.

The board is scheduled to meet tomorrow to discuss a proposal by a high-level committee, which suggested that the regulator should seek powers from the government to intercept calls and electronic communications of those suspected of serious economic offences like insider trading.

The committee, headed by former law secretary and Lok Sabha’s ex-secretary general T K Viswanathan, also suggested mandatory whistle-blower policy at listed companies and a series of changes in the rules on market frauds, insider trading, surveillance and investigations.

Besides, a code of conduct for the prevention of insider trading, similar to the one applicable to listed companies, should be applied to market infrastructure institutions such as stock exchanges and depositories as they also handle unpublished price-sensitive information.

The officials said that the board may deliberate upon a SEBI-appointed committee report on settlement mechanism, which recommended that proceedings relating to insider trading, front running and mis-statement in IPO documents may be settled “depending on the facts and circumstances of each case’’.

It also suggested a confidentiality clause in the settlement mechanism, wherein the identity of the applicant will not be disclosed to garner information of defaults along with possible violations from defaulters in the securities.

To deepen the corporate bond market, SEBI is likely to discuss a framework that require large corporates to raise 25 per cent borrowings through this route from next fiscal.

The framework is proposed to be implemented from April 1 next year and the large corporates identified as on March 31, 2019 will have to garner at least 25 per cent of their borrowings made in 2019-20 through the bond market, SEBI said in a consultation paper.

Besides, a proposal on inter-operability, which will permit trading members to clear trades through a firm of their choice instead of going through the clearing corporation owned by the bourse on which the trade was executed, will also be taken up.

Also, it is expected to consider on a suggestion on doing away with the requirement of one per cent security deposits for public issuance of debt securities.

Further, the board is likely to discuss on the procedure of transmission of securities in physical mode and the regulator may take up the issue of consistency in respect of payment of fees for seeking certain exemptions from the compliance with SEBI norms.

With regard to fiduciaries in the securities market, stricter framework in this regard will be taken up at the meeting. In July, the regulator had issued a consultative paper on the proposed SEBI (Fiduciaries in the Securities Market) (Amendment) Regulations for public consultation.

The amended norms will be applicable for entities that undertake third-party fiduciary duties, assignments and engagements under the securities law.

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